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AG Racine sues tax preparation company over 'misleading' cash incentive program

Liberty Tax Service. (7News/File)
Liberty Tax Service. (7News/File)
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Liberty Tax Service is being sued by D.C.’s Attorney General Karl Racine.

The lawsuit claims at least four Liberty Tax Service locations in D.C. participated in a $50 “Cash In A Flash” incentive program starting as early as 2015, that resulted in extra charges for customers.

Racine told 7News On Your Side’s Lindsey Mastis that customers got $50 cash but later learned they basically paid for their own incentive and then some. The lawsuit alleges that some customers paid upwards of more than $200 for participating.

“You've got to tell D.C. residents the truth about the cost, and exactly the service you will provide,” Racine said. “Here, what we found was Liberty Tax did not tell the truth. They simply lured people into their tax filing business by offering $50 and then started to charge them for all kinds of fees that were uncalled for.”

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The lawsuit also details marketing practices, and how employees were instructed to convince skeptical customers to take the money.

Ariel Levinson-Waldman, Founding Director of Tzedek D.C., said the organization began hearing from District residents who had questions and concerns as far back as three years ago.

“Even if they were owed a return, it was eaten up, either entirely or almost entirely by the fees that Liberty charged,” he said.

The lawsuit also alleges that low-income customers who filed early were especially impacted.

“They're preying on the hardest-working people who need money the most,” Racine said.

7News reached out to Liberty Tax Service by phone. They quickly got back leaving a message that said they won’t comment on pending litigation and have “no comment” at this time.

Racine said if D.C. wins the lawsuit, he hopes it means customers can get their money back.

Levinson-Waldman urges those who qualify to utilize free tax services instead of paying a company.

For help from an attorney or financial counselor via Tzedek DC, call their intake line at 202-274-7386 or click here.

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