Antwan Epps knew some Maryland offices of Liberty Tax Service had run into trouble with state regulators in the past, but that didn't stop him from entering one of the national chain's Baltimore storefronts this week for help preparing his returns.
After all, the door at 503 W. Lexington St. was open and a man inside, who Epps said showed him his certification, was available to help him right away.
"If they have a problem, that's between them and the state," Epps said. "I'm doing what I got to do."
The Liberty Tax office Epps walked into is among the 93 tax preparation firms Maryland Comptroller Peter Franchot has barred from filing state tax returns electronically because they submitted filings deemed suspicious.
While the comptroller can reject their electronic filings, he can't prevent the businesses from continuing to accept clients. They can still file federal returns. And they can still file paper state returns, which Vanessa M. Szajnoga, a vice president and general counsel for Liberty Tax, pointed out in a statement to The Baltimore Sun.
"We have been working with the Maryland Comptroller's office to resolve any issues with Liberty offices in Maryland," Szajnoga said in response to questions about Franchot's action.
Next tax season, the comptroller will have more authority to temporarily shut down businesses he suspects of fraud under legislation pushed by Gov. Larry Hogan and approved by the General Assembly during the session that ended Monday.
Franchot's actions this year to refuse to process electronic returns from some preparers could create difficulties for recent customers. If they used a now-blacklisted preparer before Franchot's ban, their return could be subject to additional scrutiny, leading to an audit or delay in receiving a refund. Paper applications filed by preparers on the list will get similar scrutiny, the comptroller's office says.
If a preparer barred from filing electronically does so anyway, the return will be rejected — and the comptroller's office says it has no way to alert individual taxpayers that has happened. The state's electronic filing system blocks electronic returns based on the preparer's identification number without ever knowing the taxpayer the form belongs to.
"I am worried because not everyone reads the paper, or watches TV or sees the ways this is getting out," said Robin McKinney, director of Maryland CASH Campaign, a consumer finance advocacy group. She said she supports Franchot's action but regrets that it also can cause hardship. "You're putting it back on the taxpayer, when all they did was get their taxes done."
Franchot's office acknowledges the unintended consequences of its efforts, but says the state must crack down on suspicious tax activity, a growing concern as the vast majority of taxpayers file electronically and hackers become more advanced. This year alone the comptroller's office has blocked 5,523 suspicious returns worth $10.3 million.
"We can't presume to know that every single taxpayer out there is going to be 100 percent informed, especially given there are a lot of moving parts," said Alan Brody, a spokesman for Franchot. "We try to capture as many people as we can, and when they fall through the net, we try to work with them."
The comptroller's office does not know precisely how many taxpayers might be affected by the ban on the 93 tax preparers, but said the number is likely in the hundreds.
The office publishes information sheets and does community outreach to teach consumers how to recognize warning signs at a tax preparer's office, how to review their paperwork for errors and what to do if they suspect something is amiss.
Common red flags include finding that their preparer has claimed extra dependents, reported income for a business that doesn't exist or inflated income.
Brody said the comptroller's office would work with people who thought their returns had been filed in order to avoid penalties.
Next year, under the new law, the comptroller's office will have authority to seek a court injunction to halt tax preparation businesses suspected of fraud while an investigation is conducted.
"It gives us the authority to truly shut down the bad actors and not just slap a label on them and hope they comply," Brody said.
A 2016 study published by the Progressive Policy Institute found that national chain tax preparers cluster in neighborhoods where many residents qualify for the Earned Income Tax Credit, which is available to working families with income below $53,505.
The amount of the credit depends on family size and income, but can be worth up to $6,269.
"These corporations have figured out that this is a vulnerable population that's about to come into a nice chunk of cash, and they can get a cut," said Paul Weinstein Jr., the director of Johns Hopkins University's graduate program in public management and a co-author of the report.
The report found that tax preparers often charged extra fees to complete the additional paperwork required to file the credit.
Language barriers and discomfort with complex tax forms also push residents in these communities to tax preparers, Weinstein said.
"You go to a tax preparer because you trust them, you think they know more than you do," said Janice Shih of the Maryland Volunteer Lawyers Service, which runs a taxpayer clinic.
The deadline to file taxes is Tuesday, April 18.
To find out the status of a previously filed return or to check whether the comptroller is processing electronic returns from a particular preparer, call 410-260-4020.
A full list of tax preparers barred from filing electronic returns is available online at www.marylandtaxes.com