Jackson Hewitt franchises cited for tax fraud

WASHINGTON – The government said Tuesday it is trying to shut down more than 125 Jackson Hewitt tax preparation stores in four states for systematic “tax-fraud schemes.”

The Justice Department accuses the franchises of bilking the government out of more than $70 million through fraudulent practices such as using phony W-2 forms, bogus deductions and fuel tax credits and false claims regarding the earned income tax credit.

Jackson Hewitt Tax Services Inc., with more than 6,500 franchises, is the nation’s second-largest tax preparer after H&R Block Inc. The franchises were either totally or partially owned by Farrukh Sohail, the Justice Department said, and involved “a pervasive and massive series of tax-fraud schemes,” according to court filings.

Ron Brunson, Sohail’s Birmingham, Ala.-based attorney, said his client would not voluntarily stop preparing tax returns at the Jackson Hewitt franchises but was “hoping to work things out” with the Justice Department and IRS.

Employees allegedly were encouraged to ignore telltale signs of fraudulent information and to file claims even when it was obvious customers were using fake W-2 forms or false deductions.