Georgia begins to recoup $6.4M after Channel 2 tax fraud investigation

ATLANTA — Georgia taxpayers are beginning to repay what they owe the state after a Channel 2 Action News - Atlanta Journal-Constitution investigation exposed a local elected official who inflated thousands of tax returns.

It's the largest case of its kind in state history; Georgia could recover more than $6 million.

"Those taxes are rightfully owed to the state," said Georgia Department of Revenue Commissioner Lynne Riley,  "So anyone who isn't paying their fair share is compromising everybody else."

Taxpayer after taxpayer told investigative reporter Jodie Fleischer they thought they could trust Ruth Barr.

After all, she didn't just run a Hapeville tax business, she was also an elected official serving on the city council.

But earlier this year, Channel 2 and the AJC revealed a trail of unhappy customers stuck with IRS audits and bogus tax returns.

"Obviously they're upset, they feel like they were duped," said Department of Revenue chief investigator Josh Waites. "It doesn't matter who's doing your taxes, you need to look."

Georgia Department of Revenue investigators immediately opened a criminal investigation, raiding Barr's tax business, and alleging she inflated the value of her clients' refunds.

Now the state is sending Barr's clients letters asking for that money back, plus they have to pay what they would have owed had their taxes been done properly.

"It's disappointing when any taxpayer is compromised and if there is information on a return that a taxpayer can substantiate, then we're providing them that opportunity to do so," said Riley.

The first 100 letters were sent to the taxpayers who appear to owe the state the most money: approximately $872,000.

Investigators said in all, there are nearly 8,000 suspicious tax returns filed through Barr's office during tax years 2013, 2014 and 2015, for an estimated $6.4 million.

"It's a big case for us considering that's one preparer in South Fulton County," said Waites, "It just kind of shows you the kind of damage one preparer can do."

"It's important that taxpayers know what is on a return that they sign," added Riley, "They're responsible ultimately for the accuracy and the validity of that information."

If there are discrepancies in the return, the taxpayer is responsible.

Ruth Barr is already facing one criminal charge for an alleged investment scheme involving a family member in Gwinnett County, and a civil fraud judgment for another scheme involving a former client in Fulton County.

State investigators said that is just the beginning of her legal trouble.

"We anticipate several felonies indicted in Fulton County in the next couple of months," said Waites.

Barr has repeatedly denied any wrongdoing.

“They came and took all of her paperwork and computers 8 months ago and have yet to arrest or indict her on any formal charges. Basically, they’re keeping her from being able to operate her business or being able to work on defending herself,” Barr's attorney Steve Adkins said in a statement.

She rebuffed her fellow Hapeville council members' efforts to get her to resign.

Georgia's Department of Revenue has already blocked Barr and any of her employees from submitting tax returns next year.

Our investigation also revealed that Georgia does not require any training or have any oversight of the state's tax preparers, making it even more important to check out the credentials of the person you're hiring.

"It's vital that taxpayers know who they're working with," said Riley. "They need to be sure that whoever it is they're entrusting with their financial and identity information. They need to know they can have full confidence in the integrity of that individual."