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Liberty Tax

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Liberty Tax
Company typeSubsidiary
Founded1997; 27 years ago (1997)
Virginia Beach, Virginia, U.S.
FounderJohn Hewitt[1]
Key people
Brent Turner, CEO
Products
ParentNextPoint Acquisitions Corp
Websitewww.libertytax.com

Liberty Tax, is a chain of franchise and company-owned locations that provide tax preparation services. It is known for its wavers, people in Statue of Liberty costumes and Uncle Sam costumes, used as a form of guerrilla marketing.[2] It is the third largest institutional tax preparation service provider in the United States and second largest in Canada.

History

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The company began in Canada in 1997 when John Hewitt, co-founder of Jackson Hewitt, acquired a Canadian tax franchisor, U&R Tax Depot. In 1998, the company became Liberty Tax Service and opened five offices in the United States.[3] In 2012, it was named as a "Top 20 Franchise for the Buck" by Forbes, having grown to over 3,500 franchise locations.[4]

In 2009, Liberty Tax was ordered to pay $1.3 million for engaging in unfair business practices related to its refund anticipation loans.[5][6] It later settled with the Department of Justice over allegations that its franchisee locations inflated some customer tax returns between 2013 and 2018.[7] Founder Hewitt was terminated as CEO in September 2017 after Liberty Tax reported poor financial performance and was forced to close down dozens of its offices due to allegations of tax fraud.[8] Hewitt formed a competing business, ATAX, in 2019[9] and was sued by Liberty for stealing business from them by using inside information.[10]

In 2019, Liberty Tax became a subsidiary of the Franchise Group.[11] In 2021 it was purchased by and became a subsidiary of NextPoint Financial.[12] The same year it was combined with LoanMe, a personal and small business loan company based in California.[13] As of 2021, it is the third largest institutional tax preparation service provider in the United States and second largest in Canada.[14]

In July 2023, NextPoint Financial, Liberty Tax's parent, filed for bankruptcy in Canada, and Chapter 15 bankruptcy in the United States.[15] In January 2024, NextPoint Financial completed a going-concern sale transaction to BP Commercial Funding Trust, Series SPL-X. Liberty Tax will continue to operate normally under the new ownership.[16]

References

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  1. ^ Carter, Gary W. (March 29, 2004). Getting Started in Tax Consulting. Wiley. ISBN 9780471201434. Retrieved April 17, 2022.
  2. ^ "Black Enterprise". Black Enterprise. The University of Michigan. September 24, 2010. Retrieved April 17, 2022.
  3. ^ Tax Service Franchise Reviews Archived October 28, 2011, at the Wayback Machine
  4. ^ "Top 20 Franchises for the Buck". Forbes.
  5. ^ Court rules against Liberty Tax Service
  6. ^ "Attorney General Prevails In Lawsuit Against Income Tax Preparation Company". Archived from the original on February 16, 2015. Retrieved February 15, 2015.
  7. ^ Pierceall, Kimberly (December 3, 2019). "Liberty Tax to pay $3 million settlement to IRS, make fraud fixes". The Virginian-Pilot. Retrieved April 17, 2022.
  8. ^ "Liberty Tax ousts John Hewitt as CEO". Accounting Today. Retrieved January 22, 2018.
  9. ^ Ewen, Beth (January 24, 2019). "Forced out of Liberty Tax Service, founder John Hewitt will try again". Franchise Times.
  10. ^ Pierceall, Kimberly (February 9, 2021). "Liberty Tax sues former founder, CEO accusing him of using confidential info to interfere". The Virginian-Pilot.
  11. ^ Thomas, Brad (September 16, 2021). "Franchise Group: A New Strong Buy That Should Climb To The Sky". Seeking Alpha. Retrieved April 17, 2022.
  12. ^ Pierceall, Kimberly (February 22, 2021). "Virginia Beach's Liberty Tax to be sold for $243 million". The Virginian-Pilot. Retrieved April 17, 2022.
  13. ^ Dornbrook, James (September 23, 2021). "Kansas City-based Lead Bank forms two new fintech partnerships". Kansas City Business Journal.
  14. ^ "Liberty Tax Service Set for Supercharged Growth as Winning Franchise Opportunity". Franchising.com. Retrieved April 17, 2022.
  15. ^ "Liberty Tax parent restructures after bankruptcy". Accounting Today. July 26, 2023. Retrieved February 4, 2024.
  16. ^ "NextPoint Financial Completes Going Concern Sale Transaction". Yahoo! Finance. January 2, 2024. Retrieved February 4, 2024.
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