Jackson Hewitt Franchises Shut Down For Tax Fraud

A great day for H&R Block:

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. is the nation’s second largest tax preparer. 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.

It should be emphasized that these are franchised stores owned by a single proprietor; Jackson Hewitt is not being accused of wrongdoing as a company. Still, this is most embarrassing and yet another sign that you probably shouldn’t be paying amateurs to prepare your taxes.

I await columns and blog posts noting that “Farrukh Sohail” sounds suspiciously Middle Eastern and wondering whether this is an Islamofascist jihad against the tax system. (I’ll keep an eye out on Technorati.)

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. legion says:

    That depends… is “Farrukh Sohail” a major GOP contributor? If so, look for the case to be dropped within weeks.

  2. Adam Graham says:

    I don’t get why these businesses are doing so well. With the right software, you can quite easily do your own from your own home.

  3. bob in fl says:

    As usual, the meat of a story is usually towards the end of it. What the tax preparers are guilty of is not stopping the obvious tax cheats from filing fraudulent returns. The tax payer cheats, & the franchises let them get away with it.

    But rest assured, the IRS won’t. Pity the honest taxpayer who happened to use these preparers.

  4. jpe says:

    I don’t get why these businesses are doing so well. With the right software, you can quite easily do your own from your own home.

    90% of ’em are easy enough to do with excel, if not by hand. I think most people just prefer not to think about it; it’s the same reason some people (like me) take mail and shove it under the couch.

  5. Tlaloc says:

    Still, this is most embarrassing and yet another sign that you probably shouldn’t be paying amateurs to prepare your taxes.

    Um…
    If you are paying them to do something doesn’t that, by definition, make them professionals?

  6. James Joyner says:

    If you are paying them to do something doesn’t that, by definition, make them professionals?

    Nope. If I charge you $100 to drill a hole in your head, it doesn’t make me a brain surgeon. For that matter, hiring your buddies to help you move for all the pizza and free beer they can consume doesn’t make them professional movers, either.

    Hastily trained tax preparers at places like that aren’t “professionals” in any meaningful sense.

  7. Tlaloc says:

    Nope. If I charge you $100 to drill a hole in your head, it doesn’t make me a brain surgeon. For that matter, hiring your buddies to help you move for all the pizza and free beer they can consume doesn’t make them professional movers, either.

    It doens’t make you a brain surgeon but it does make you a professional “head hole driller.” And I disagree on the second part. They are professional movers, seeing as profession just means someone who is paid to do something, and what they were paid to do is to move.

  8. […] James Joyner at OTB says ‘just another sign that you probably shouldn’t be paying amateurs to prepare your taxes.’ If one either feels incapable of doing their own taxes or is just too lazy, firms like Block are the best choice. A Block preparer will cost you one fourth what professionals like a CPA will charge and your return will be done just as properly. Block has a variety of experienced preparers in their offices, it was my experience that if a preparer got a customer whose return was beyond their expertise, they’d hand it off to someone who could. Only the most complicated of returns require a tax professional. We amateurs can do just as good a work. […]

  9. Jeffrey Foster says:

    Getting paid for work just means you are holding yourself out to be a professional and someone else has taken you to be a professional.

    http://en.wikipedia.org/wiki/Professional

    If you will go to the above site you will find that a “true” professional has a level of training and knowledge which allows that individual to present him/her self to be a “professional”.

  10. Darrell Vandover says:

    I worked for Mr Sohail in his franchises for the last two years. At no time was it suggested that I do anything fraudulent. We did in many cases have to take the taxpayers word that the information that they presented was true. But, since they are the ones that are responsible for their returns, this remains the taxpayers issue. In our particular store, taxpayers were told that it was their ultimate responsibility for the accuracy of their return. They were also told what was “legal” and what was “not”.

    I was subjected to a very poor training process and was paid such a low rate, after being misled to believe that it would be much more, that I can understand, if not condone, why some people would seek to collude with others to file fraudulent returns. Some of the blog postings hit the nail on the head. You get what you pay for. At the rate Mr Sohail was paying ($7.00/hr), you will not get tax “professionals”.