State revenue agents on Wednesday arrested Hapeville City Councilwoman Ruth Barr in connection with a fraud investigation involving thousands of suspicious tax returns her company prepared for clients across the metro area.
Barr has operated her tax preparer's business in the South Fulton County community for decades and has a history of preying on her clients, an AJC investigation found. Revenue agents charged Barr with perjury and served an injunction this week that orders her and her firm, B & B Accounting and Tax Service, to stop preparing tax returns.
The perjury charge stems from a 2012 lawsuit filed by one of her former tax clients who accused Barr of stealing $182,354 as part of a bogus investment scheme. In a sworn deposition from that case, Barr claimed that she was an enrolled tax preparer with the IRS.
“That’s a designation the IRS gives out that requires a lot of training and certification,” said Josh Waites, the state revenue department’s chief investigator. “We verified with the IRS that she’s not.”
Barr’s arrest Wednesday is one of the largest tax preparer fraud investigations the state has ever undertaken and involves thousands of tax returns prepared by Barr’s firm. Records show the case could include close to 8,000 state income tax returns prepared by the company between 2013 to 2015.
The scheme involved a pattern of bogus deductions that Barr and her firm prepared for clients that allegedly defrauded the state of tax revenue totalling more than $6 million, records show.
The department launched its investigation last year after an investigation by The Atlanta Journal-Constitution and Channel 2 Action News uncovered a pattern of Barr preying on her tax clients, either by getting them to loan her money or by preparing returns that led to audits and penalties by the IRS.
In Georgia, anyone can hang a shingle and prepare taxes without any certification or professional certification. Some of Barr’s clients believed she was an accountant, but she wasn’t. Waites cautioned people from using the firm in the coming tax season.
“With everything going on, I would be very careful about using (Barr), and that’s why we filed the injunction to hopefully keep that from happening,” he said.
In a Gwinnett County case, Barr is facing criminal charges involving allegations that she stole $109,000 from a dying family member's nest egg. The 2012 lawsuit that led to the perjury charge led to a civil judgment against Barr two years ago totalling $237,600, but she has never paid the victim in that case.
Waites said the revenue department hopes to file additional charges against Barr. Her daughter, Anne Barr Cruz, was also linked to the state investigation this week, although she has not been charged. The Department of Revenue named her as a defendant in the injunction served this week.
The injunction reveals that the tax returns linked to Barr’s firm that agents have reviewed thus far had unusually large deductions. The Barrs allegedly added false information to the returns without the taxpayers’s knowledge. In one case, Barr’s firm added $6,668 in fictitious, unreimbursed job expenses to lower a client’s tax liability, records show.
The revenue department is currently in the process of auditing thousands of returns prepared by the firm. Agents recently mailed letters to her clients asking them to verify the deductions.
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