Liberty's chief compliance officer Jim Wheaton said the tax store chain is conducting its own investigation and is cooperating with the state effort. There are 102 Liberty offices operating in Maryland, the company said. A substantial number of the offices that are subject of the state's action are in the Baltimore area.

"We are in the midst of our own investigation of the offices involved, and will continue to conduct that investigation aggressively, and support the state's review, until all questions are resolved," Wheaton said in a prepared statement.

Maryland said the indicators it looks for in targeting suspected fraud is business income reported when taxpayers did not own a business; refund amounts requested much higher than previous year tax returns; inflated and/or undocumented business expenses; dependents claimed when taxpayer did not provide required 50 percent support or care; and inflated wages and withholding information.