ATLANTA FEDERAL COURT BARS TWO JACKSON HEWITT FRANCHISE EMPLOYEES FROM PREPARING TAX RETURNS FOR OTHERS

First Civil Injunction First Entered Following Lawsuits Filed Against Jackson Hewitt Franchises in Four States in April

WASHINGTON, D.C. - A federal judge in Atlanta has permanently barred Hileah Braxton and Tameka Donaldson—both of whom worked at a Jackson Hewitt franchise in Atlanta—from preparing federal income tax returns for others, the Justice Department announced today. The court found that the two women “interfered with the enforcement of the internal revenue laws by continually and repeatedly understating their customers’ tax liabilities.”

Judge Clarence Cooper of the U.S. District Court for the Northern District of Georgia issued the permanent injunction after the two failed to respond to the government lawsuit against them. Both preparers had worked at Smart Tax of Georgia Inc., d/b/a Jackson Hewitt Tax Services, which was one of four Jackson Hewitt franchises that the government sued in early April, alleging widespread fraud.

Jackson Hewitt is the nation’s second largest tax preparation firm. It has franchised and company-owned stores throughout the country.

On April 2, 2007, the Justice Department filed civil injunction suits against Jackson Hewitt franchises located in Chicago, Detroit, Raleigh–Durham and Atlanta. The suit in Atlanta named Smart Tax of Georgia, Braxton and Donaldson, and two men, Farrukh Sohail and Steven Everly. The court’s order resolves the case against the two women. The case against Smart Tax of Georgia and the two men remains pending, as do the three lawsuits in other cities. Information about the cases is available at http://www.usdoj.gov/tax/txdv07215.htm.

The complaints in the four cases allege that the defendants “created and fostered a business environment in which fraudulent tax return preparation is encouraged and flourishes.”

Examples of fraud alleged in the lawsuits include filing false returns claiming refunds based on phony W-2 forms; using fabricated businesses and business expenses on returns to claim bogus deductions; claiming fuel tax credits for customers clearly not entitled to any credits; and massive fraud related to claiming the federal earned income tax credit.

Since 2001, the Justice Department’s Tax Division has obtained more than 245 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department Web site at http://www.usdoj.gov/tax/taxpress2007.htm. http://www.usdoj.gov/tax/taxpress2007.htm. More information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax/index.html.