This need to evaluate the compliance process stemmed from action by Maryland State Comptroller Peter Franchot in late January and early February to stop accepting returns from 23 Liberty offices in that state.

Hewitt said beside the review and cooperation with authorities, Liberty's action include preventing some franchisees from filing returns, blocking others from filing certain kinds of returns and terminating others.

However, he said it is likely that the worst of fraud industry-wise is over. Because of those attempting to fraudulently utilize the Earned Income Tax Credit "most of the fraud is early season versus late season."

He told analysts that except for the impact of negative publicity, most of the impact from the activity in Maryland has passed.