Md. comptroller suspends processing of tax returns by 37 private preparers

Maryland Comptroller Peter Franchot said he is blocking tax returns from dozens of private preparers throughout Maryland.

In all, the processing of tax returns by 37 private tax preparers have been suspended because of questionable and suspicious information on returns submitted by these preparers.

"People claiming business deductions when they have no business, people claiming dependents when they had no dependents," said Franchot. "This is not fudging on your taxes. This is out-and-out fraud and we decided to get ahead of it."

State officials said thousands of customers who filed their taxes through these tax preparers will now be forced to prove that the information they have provided is correct before the state of Maryland will process their return.

Franchot told FOX 5 that he is particularly concerned about what he sees as pattern of tax preparation companies setting up shop in low income neighborhoods and filing returns on behalf of low income taxpayers. He said those taxpayers are left holding the bag because these tax companies prepared their returns for them.

Tax returns have been ordered halted from 23 Liberty Tax Service franchises. No one from their corporate offices got back to us on Wednesday.

However, Roy Cogliamdolo, the owner of a Liberty Tax franchise in Langley Park, said he has been flooded with calls all day from concerned customers. He told us he has done nothing wrong and he has got nothing to hide.

"Absolutely not," he said. "Not that I know what I have done because all I have been told is that we are being suspended for questionable returns. I don't know what that means. I welcome the comptroller to audit all my files - all 100 of them. I will sit with them and go right through them."

Franchot is working with both state and federal law enforcement officials to determine in criminal charges are warranted.