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34 Raleigh Jackson Hewitt and Smart Tax Outlets Accused of Fraud

According to a report published in the April 4, 2007 edition of the Raleigh News & Observer, employees of Smart Tax/Jackson Hewitt may have participated in schemes to claim illegal dependents based on "borrowed" or "purchased" Social Security numbers. The outlets are also accused of filing false information to boost taxpayer's earned income tax credit and encouraging customers to file fraudulent returns (Source: David Ranii, "34 Tax Outlets accused of fraud," Raleigh News & Observer, April 4, 2007).

Ultimately, the taxpayer is responsible for a fraudulent return. Taxpayers who have filed fraudulent returns must not only return their refunds. They may be liable for additional taxes, interests and penalties if fraud is found.

About North Carolina Refund Anticipation Loans

Jackson Hewitt Tax Services is the second-largest tax preparation service provider in the United States and has faced several lawsuits in the past year over what may be fraudulent marketing practices and fraudulent business practices. Jackson Hewitt is one of the three largest providers of “refund anticipation loans,” or RALs, marketed as easy way to get your tax refund back immediately.

RALs have been criticized for targeting low-income taxpayers by promising cash immediately in exchange for a loan. But the interest rates on those loans may be breaking the backs of low-income consumers. Firms like Jackson Hewitt are accused of charging as much as 100 to 700 percent interest on these loans. Generally, a taxpayer should receive his or her refund from the IRS in four to eight weeks for free if he or she filed his own return or as soon as two weeks if the return is filed electronically.

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Targeting the Poorest North Carolinians

According to a recent study by the Community Reinvestment Association of North Carolina (CRA-NC), in 2005, the last year for which data was available, nearly 11 percent of tax filers in North Carolina applied for RALs. Interest rates from these products garnered firms like Jackson Hewitt an estimated $44 million in sales that year. Of the 11 percent of North Carolina taxpayers who applied for RALs, 86 percent of applicants were of low to moderate income, people who could ill-afford to pay a high interest rate.

The CRA-NC study found that not only were poorer taxpayers the main applicants for RALs, but in the poorest areas of North Carolina, use of RALs was over 40 percent.

Source: Bob Geary, “Refund loans target the poor,” Independent Weekly, February 21, 2007.

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Call Now if you were a victim of Smart Tax North Carolina/Jackson Hewitt Tax Service

The U.S. Justice Department has filed a civil injunction in the federal district court of Raleigh asking the court to bar franchise owners Farrukh Sohail and Adeel Ali of North Carolina from continuing the business of tax preparation. John Wizner, regional manager of Smart Tax of North Carolina, which operates under a franchise agreement with Jackson Hewitt Tax Services Inc., is also named in the suit.

If you were a customer of Smart Tax/Jackson Hewitt in or around the Raleigh metropolitan area, and suspect that you were a victim of unscrupulous marketing practices or fraudulent business practices, the counsel of a personal injury attorney may be in your best interest.

If you or someone you know received a refund anticipation loan, or filed a tax return and are now concerned that you may be responsible for fraudulent activity, contact us today to see if we can help. The call is free.

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