The nation’s fourth largest tax preparation firm has been targeted by federal regulators for pervasive fraud. Instant Tax Service (ITS) has allowed inflated consumer tax refunds in order to allow for “junk fees” and other charges that often total $1,000 for simple tax returns.
Imagine paying a thousand bucks for preparation of your income tax return. Customers of Instant Tax Service have been unknowingly charged fees totalling a grand, often for preparation of simple returns that only take about 15 minutes time to complete.
Predatory tax return preparers like ITS frequently charge a series of fees that are added up during the preparation of a tax return. For example, most charge an additional fee for each Form W-2 or 1099 that is entered in. Often these fees are $5 or more even though it only takes about 90 seconds to enter in the data.
To further add up the junk fees, there are separate fees for e-filing both the state and federal returns, and there are fees for getting your money faster. Refund Anticipation Loans (RALs) and Refund Anticipation Checks (RACs) carry their own high fees which can quickly push total return preparation fees into the several hundred dollars territory.
ITS used poorly trained tax preparers to serve low-income tax filers who would lack the savvy to question the high fees. Additionally, an Indianapolis franchise reportedly conducted a training course in 2010 which directly instructed employees on the fraudulent preparation of tax returns so that a higher refund could be obtained. These higher refunds were the basis of collecting inflated fees.
To win higher refunds, the tax preparers at ITS routinely falsified information used on the returns. Specific acts of fraud include claiming non-qualified deductions, reporting losses from bogus businesses, abusing the Earned Income Tax Credit, claiming ineligible dependents and selecting incorrect filing statuses.
Now the Justice Department is acting to shut down ITS for filing fraudulent tax returns on a large-scale basis. The Feds claim that ITS purposefully turns a blind eye to fraudulent practices that are commonplace at so many of its franchise locations. Owner Fesum Ogbazion claims he does not track complaints about fraudulent practices because he “wouldn’t be able to sleep.”
As is commonplace with tax fraud, victims of Instant Tax Service will be on the hook for inflated refunds. They will be expected to repay the overages plus interest and possible penalties, although they could petition the Internal Revenue Service to waive those penalties due to the circumstances. Still, since most of these lower income families will have already spent the money, it will likely result in them losing all or part of next year’s refund until the overages have been deducted from their refunds.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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