The US Government has filed “civil injunction suits against five corporations that operate Jackson Hewitt tax preparation franchises, as well as 24 individuals who manage or work at the franchises.” The suits allege that employees at 5 Jackson Hewitt franchisees committed pervasive fraud.

One example given in the IRS Press Release stated that a barber claimed a fuel tax credit for buying 25,000 gallons of gas for highway use. The IRS calculated that the customer would have had to drive “1,370 miles each day, seven days a week, to consume that much fuel in one year, leaving little if any time to cut hair.” Well, maybe he had one of those “Books on Wheels” trucks, but for hair. Ok, maybe not.

The lawsuits also claim that managers of the franchises in question received kickbacks from customers for helping them file fraudulent returns. In all, the government estimates the losses to the US Treasury at $70 million. The franchisees named in the suit are:

Chicago: Smart Tax, Inc., d/b/a Jackson Hewitt Tax Service; Ask Tax, Inc., d/b/a Jackson Hewitt Tax Service;

Atlanta: Smart Tax of Georgia, Inc., d/b/a Jackson Hewitt Tax Service;

Detroit: So Far, Inc., d/b/a Jackson Hewitt Tax Service; and

Raleigh: Smart Tax of North Carolina, Inc., d/b/a Jackson Hewitt Tax Service

They are all owned or partially owned by one franchisee, Farrukh Sohail. —MEGHANN MARCO

U.S. Government Sues Jackson Hewitt Tax Preparation Franchises in Four States, Alleging Pervasive Fraud [IRS]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.