Controversy
On April 20, 2007, the Internal Revenue Service investigated allegations of fraud involving eight franchise-owned Instant Tax Service locations in Missouri. Though no charges were made, and no decision reached, Instant Tax Service terminated its contract with the franchisee saying the franchisee had expanded its business too quickly. The company no longer permits franchisees to operate more than a pre-determined number of storefronts during their first and second year.
In June 2010, the Internal Revenue Service returned all property and files to the Missouri franchisee with no further action taken.
A federal court has preliminarily enjoined ITS Financial LLC, the parent company that owns the Instant Tax Service tax-preparation franchise operation, the Justice Department announced today. Dayton, Ohio-based ITS claims to be the fourth-largest tax-preparation firm in the nation, according to the government complaint in the civil lawsuit. Judge Timothy Black of the U.S. District Court for the Southern District of Ohio signed the order, which also applies to the company’s CEO, Fesum Ogbazion. The defendants consented to the preliminary injunction.
The preliminary injunction will remain in force pending the court’s decision following trial in the case. Trial on the government’s suit seeking to shut down the defendants with a permanent injunction is scheduled to begin on May 20, 2013, in Dayton.
According to the government complaint in the case, ITS franchisees routinely prepare and file fraudulent federal tax returns, fabricate deductions and invent phony businesses. The suit further alleges that ITS franchisees file tax returns without customer authorization and without proper employer-issued W-2 wage statements, and charge customers exorbitant and bogus fees. Defendants and their franchisees allegedly lure mostly low-income customers into ITS stores by offering deceptive and misleading loans such as “Instant Cash” or “Holiday” loans, often before the tax return filing season begins. Defendants have denied the allegations in the complaint.
Read more about this topic: Instant Tax Service
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