by: Nicole Carr Updated:
HAPEVILLE, Ga. - Channel 2 Action News has learned the Department of Revenue has dropped its civil action against Ruth Barr. The voluntary dismissal was filed in Fulton County Superior Court late Wednesday afternoon, as we reported her legal team’s request.
This dismissal essentially means the state will forego any efforts to put Barr out of business amid their criminal investigation into tax fraud. Barr’s attorneys requested the dismissal on Friday, citing the desire to go forth with a trial if the state decided against dropping the civil case.
The state launched its investigation into Barr after a Channel 2 Action News and Atlanta Journal-Constitution investigation. It revealed a pattern of Barr allegedly preying on clients, either by prepping returns that led to audit and penalties by the IRS or by getting them to loan her money.
Former clients have found themselves under widespread audit, as revenue investigators allege tax fraud, costing the state upwards $6 million. Clients are now being asked to repay the state if they can’t come up with the receipts to back years of returns prepared by Barr.
“In my 30-some years of being a tax attorney in Georgia, I have not heard of the Georgia Department of Revenue trying to civilly shut down a tax preparer,” said Jeff Cohen, a tax attorney with Cohen, Cooper, Estep and Allen. The firm is representing Barr against the state.
Earlier this month, a judge denied the state’s request to prevent Barr from filing taxes amid the Department of Revenue’s criminal investigation. He decided the state’s lawyers did not meet the burden of proof to support assertions that clients could be at serious risk by using Barr’s services.
Barr’s team argued Wednesday the state alone is creating blanket trouble for former clients based on a small sampling of returns presented as evidence in the hearing.
- Mar 17, 2017: Channel 2 confronts tax preparers accused of defrauding clients
- Mar 2, 2017: Judge says tax preparer accused of fraud, can keep doing taxes
- Jan 11, 2017: Councilwoman charged after Channel 2 investigation
- Dec 21, 2016: Georgia begins to recoup $6.4M after Channel 2 tax fraud investigation
- Sep 29, 2016: Hapeville councilwoman faces new allegations in credit loan scheme
- Aug 5, 2016: Special Treatment? City Official Dodges Arrest Warrant in City She Serves
- May 26, 2016: Firefighters, police, paramedics targeted in fraudulent tax refund scheme
- May 26, 2016: Residents call for councilwoman to resign amid Channel 2 tax fraud investigation
- May 11, 2016: Councilwoman under criminal investigation after we uncover trail of fraud
“They have only looked at 10 tax returns, and this lady’s company prepares thousands of tax returns every year,” said Cohen.
“They’re getting billed for assuming all of their deductions are denied, which may not be the case,” continued attorney Jefferson Allen.
Cohen and Allen said it’s not uncommon for $500 deductions to denote low-level contributions made in a single tax year. It’s a pattern state investigators testified was unusual in their experience.
Additionally, Barr’s lawyers cited client responsibility in reviewing returns before they’re electronically filed. They said Barr’s work is only as good as the information she’s provided.
“Every adult that has a tax return prepared by Ms. Barr’s company is legally responsible for what’s on it,” said Cohen.
The state is flagging returns of clients who have remained with Barr and her newly formed tax business. Barr and her daughter declined to speak with Channel 2’s Nicole Carr earlier this month when Carr visited her new business, seeking a response to former client complaints. Barr has continued to solicit their business, despite the ongoing audits they’re subject to amid the state investigation.
Her attorneys are seeking an end to civil action, or discovery and a trial, to sort out the state’s allegations used to support efforts to keep Barr out of business.
“To this point I don’t think they will establish their case in trial,” said Allen.
Additionally, Barr’s legal team said her January perjury arrest and charge were perceived as being tied to the tax fraud case. Barr was arrested earlier in the year, after a deposition tied to an unrelated case exposed her as citing enrolled agent status. The state then charged Barr, alleging she purposely mislead clients, exaggerating her qualifications.
Her attorneys claim she’d essentially misspoken under oath during a period when her longtime certification had expired.
“The public might have perceived that she was being arrested for something to do with tax return preparation, and nothing could be further from the truth,” said Cohen.
No matter what results from the state investigations, Barr’s team said the damage has been done.
“Even if everything the Department of Revenue is doing stops today, there’s a negative impact on this business that will take years to recover from,” said Allen.
Citing the ongoing criminal investigation, the Department of Revenue declined to comment on Cohen's and Allen’s assertions.
© 2017 Cox Media Group.
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