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Citing potential fraud, comptroller halts processing for 7 Baltimore tax preparers

Comptroller Peter Franchot on Wednesday suspended processing of tax claims filed by seven Baltimore-area tax preparers, alleging they had collectively submitted 1,100 potentially fraudulent claims.

Franchot said seven franchises in the Liberty Tax Service chain have submitted "suspicious" tax returns that he has referred to authorities for criminal investigation. Franchot said his office" has shared the information with other tax agencies as well as the Attorney General's Office and state licensing authorities.

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The Comptroller's Office said tip-offs for its actions included business income reported by taxpayers that did not own a business; refund claims much higher than in previous year; inflated business expenses; dependents claimed when they taxpayer didn't provide half of support, and inflated wages and withholding amounts.

Martha O'Gorman, chief marketing officer at Liberty's headquarters in Virginia Beach, said the company had no information about the investigation or what discrepancies may have prompted it. She said the company has internal controls that scrutinize its franchise outlets' tax returns before they go to the Internal Revenue Service or state tax collectors.

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