Liberty Tax Service has sued a former White Plains franchisee for nearly $250,000 for allegedly diverting business.
The Virginia tax preparation service filed a complaint last month in White Plains federal court against Innocent Enaye and Tangent Point LLC.
Liberty is demanding that Enaye be stopped from soliciting customers or providing tax preparation services within 25 miles of the franchise boundary until August 2021.
“There is no merit to their claim,” Enaye said in a brief telephone interview.
“Liberty Tax has been sued repeatedly for noncompliance,” he said. “It was no good for our business, so we severed our relationship with them.”
Enaye bought the Liberty franchise for $60,000 in 2012, according to the complaint, and ran the business at 150 E. Post Road.
Liberty provided training, marketing, advertising, sales and business systems, the complaint states. Tangent Point agreed to pay royalties and fees based on a percentage of monthly gross receipts.
The franchise agreement included a two-year noncompete clause and a ban on preparing tax returns within 25 miles of the territory, after the franchise agreement expired.
Around 2017, the complaint states, the IRS authorized Tangent Point to file tax returns electronically from an address in Elmsford where Enaye operates an Allstate Insurance agency.
Tangent Point’s White Plains office transmitted 886 tax returns in 2018 but only 47 in 2019, according to the complaint. The Elmsford office, which is not covered by the franchise agreement, transmitted 14 tax returns in 2018 and 869 in 2019.
Liberty terminated the franchise agreement last August and demanded $248,316 in fees and royalties.
The tax preparation company accused Tangent Point and Enaye of trademark infringement, unjust enrichment and unfair competition.
“This is not an isolated case,” Enaye said. “They’ve been suing franchisees across the state and country for similar issues. The issue lies with them. They’ve been sued by the IRS and state taxing authorities across the nation. They’ve eroded the credibility of their franchise.”
Liberty is represented by Manhattan attorney Peter G. Siachos. Enaye and Tangent Point are represented by Roseland, New Jersey attorney Evan M. Goldman.