Hapeville tax preparer preyed on first responders

$7.6 million in refunds being questioned

Source: Georgia Department of Revenue

Year after year, Ruth Barr’s thriving tax preparer’s business, now the focus of a large state fraud investigation, serviced thousands of clients from all walks of life.

Teachers, nurses, bank tellers, lawyers, veterinarians and local government employees — they all came as Barr’s reputation spread. She was known as the tax lady on the Southside who secured healthy refunds for her clients.

But the Hapeville elected official appeared to target one group more than any other: Firefighters, police and other public safety workers for whom word of mouth recommendations spread fast.

“The person that sat behind that desk and did your taxes was a sweet woman who you trusted,” said Jason Montgomery, a former firefighter, who went to Barr for years until she stole almost $10,000 of his tax refund. “But the person she turned out to be was pure evil.”

Barr claimed to be an expert in the specific deductions that applied to firefighters and police, such as a per diem meals and other specialized business expenses that her clients didn’t understand and rarely questioned.

“Most of that’s not true,” said Josh Waites, the chief investigator with the Georgia Department of Revenue. “They trusted she would do the right thing and unfortunately she didn’t.”

Now, scores of public safety workers from across the region are among thousands of victims caught up in Barr’s alleged scheme, potentially facing thousands of dollars in back taxes and penalties.

Department of Revenue officials, who raided Barr's Hapeville office earlier this month, call it one of the largest tax preparer fraud investigations the agency has ever undertaken. State tax agents are reviewing $7.6 million in refunds covering 7,704 taxpayers and 11,404 returns that Barr's business, B & B Accounting and Tax Services, prepared the past three years. An initial audit sample found as many as 80 percent appear suspicious.

Revenue department investigators are preparing a criminal case that could send the Hapeville city councilwoman to prison. A separate, criminal case alleging Barr stole money from a relative is pending in Gwinnett County.

The state investigation follows reports earlier this month in the Atlanta Journal-Constitution/Channel 2 Action News that identified a trail of victims and fraud allegations against Barr.

A citizens group in Hapeville called for her resignation or removal from the City Council at a meeting May 25, saying she had tarnished the city’s image.

“Ms. Barr’s behavior was that of predator, preying on her innocent clients,” said Mickie Williams, president of Hapeville Community Coalition.

Barr has denied any wrongdoing. Her attorney, Steve Adkins, said she’s not interested in stepping down now or anytime soon.

“She denies that it is even possible for 80 percent of her returns filed to be suspicious as a result of invalid deductions because she doesn’t itemize that many tax returns and therefore they wouldn’t even have deductions,” said Adkins.

“With regard to the public safety employees she doesn’t victimize them she specializes in them,” he said. “She simply knows and utilizes a lot more valid deductions for them than most accountants based on simple criteria such as whether they work overtime.”

Barr has declined interview requests and she initially declined comment to reporters at Wednesday’s meeting. When pressed to answer questions, she defended her integrity and said she has “kicked clients out” because they wanted to lie on tax returns.

“I’ve been in business 50-something years,” said Barr, who is 61. “I’m not in business that long by lying.”

Interviews and court records allege Barr stole hundreds of thousands of dollars from her tax clients with bogus investment schemes and stolen refunds. And faulty returns prepared by Barr and her company have led to individual IRS audits that have cost her clients.

Since the first stories published earlier this month, dozens of her clients have come forward to contact reporters and revenue department officials, many with stories of trouble. One woman said her family had a $35,000 federal tax lien placed on their house in Stockbridge because of a mistake Barr made on their returns. Another woman in Griffin alleged that Barr stole her family’s $5,000 refund in 2012.

“People we’ve talked to so far have all said ‘Hey we thought she was an expert so we trusted her’,” Waites said. “Once we started asking them about specific information on the return, we realized most of the stuff is made up.”

Clients waited hours, but were rewarded

Roughly a third of the more than 60 clients or former clients of Barr that reporters have spoken with since the initial stories published had ties to public safety. In some departments scattered across the Southside, dozens of employees used her services. Many work second jobs to help make ends meet.

Anthony Russo, a Clayton County firefighter, turned to Barr’s firm for help nearly a decade ago when a fellow firefighter recommended her as a tax preparer.

After he married his wife, Lisa, two years ago, the couple both went to Barr’s firm. They got a notice from the IRS earlier this year that they owe more than $1,000 in unreported income on the return prepared by Barr’s firm.

Now, they worry that they could owe thousands more once the state investigation combs through all of the returns prepared by her firm. Like many clients, the Russos deducted per diem for firefighter meals and other business expenses that state agents say don’t apply. The couple also never provided any receipts for their deductions — something state agents say competent tax preparers know are necessary to document legitimate expenses.

“It’s unthinkable,” said Lisa Russo, an employee with a mental health non-profit. “Who would be that cold-hearted to be that scheming?”

Some firefighters and others who sought out Barr traveled from across the metro region and beyond, drawn by stories of solid refunds and fees that averaged $200 to $250. Many sat for hours in Barr’s cramped waiting room, but the wait was often worth it. Meetings with Barr usually lasted 20 or 25 minutes and happy clients frequently left with a refund, sometimes in the thousands of dollars.

It was common to run into other public safety workers during the wait, said Montgomery, a firefighter for nearly two decades, who sent several friends to Barr and knew many in other departments who went to her.

“She would ask about your family, ask questions about your job,” Montgomery said. “I thought it was just her love and passion for the public safety community. I didn’t realize other things behind what she was doing.”

After years of going to Barr, Montgomery’s trust was shattered. In April 2012, Barr prepared his taxes and determined he was due a $7,751 federal refund and a $1,536 state refund. She offered to have the refunds sent directly to her and she would then write Montgomery a check. Weeks went by and Montgomery heard nothing. Barr ignored his calls and never wrote the check.

He sued and won a default judgment for $10,787 in November 2014. Barr hasn’t paid a penny from that judgment, Montgomery said. He said Barr hurt his family, and he still can’t believe how many clients she may have harmed, particularly those in public safety, who risk their lives to serve the community.

“How can you wake up every morning and go to work and know you’re doing so much wrong?” said Montgomery. “I wouldn’t be able to live with myself knowing I was doing that to people.”

Now, clients wait for audit notices

Georgia, like most states, lacks oversight or regulation for tax preparers. Anyone can hang a shingle and start a tax preparation business. That creates an environment where fraud and abuse can flourish, according to experts.

The only thing surprising thing about Barr and her tax preparation business is the scope of the apparent fraud that led to so many refunds, said Liz Coyle, executive director of Georgia Watch, a consumer advocacy group.

“The ones that are bad that is exactly what they do,” she said. “The example in Hapeville seems particularly bad because of volume.”

When a tax preparer perpetrates fraud, their clients can be victims but they still must repay any taxes owed to the government. In June, the Georgia Department of Revenue expects to mail out thousands of notices to Barr’s clients asking them to justify the deductions on their returns and any refunds they received.

Ashley Shoemaker is dreading that notice. She and her husband, William, turned to Barr two years ago just weeks before their son was born. Ashley, a young veterinarian still paying off student loans, and her husband, a heavy equipment mechanic, usually received refunds.

But when they prepared their 2014 return with TurboTax it said they owed more than $3,000.

A co-worker who’d had a good experience with Barr recommended the Newnan couple seek her help. When they went to Barr, she didn’t ask to see any receipts. But the tax bill for a few thousand dollars turned into a $4,285 refund. They received a similar results when they went to her this year.

Now they worry for themselves and others who turned to Barr for help.

“It makes me sick, honestly,” Shoemaker said. “It’s just sad that somebody would do that. And it makes me angry as well to take advantage of people who are trusting her.”