Jackson Hewitt Begins Internal Review

Jackson Hewitt Tax Service Inc. reports an internal review has begun in the wake of Internal Revenue Service allegations that five franchisees defrauded it out of more than $70 million.

"Jackson Hewitt takes allegations against our franchisees seriously," Chief Executive Officer Michael Lister said.

Jackson Hewitt, the second-largest U.S. tax preparer, intends to "identify all of the facts related to these allegations and address them appropriately," Lister said.

The review is being led by Washington lawyer Fred Goldberg, a former Internal Revenue Service commissioner and Assistant U.S. Secretary of the Treasury for Tax Policy.

The U.S. Justice Department and IRS reported filing lawsuits in Chicago, Atlanta, Detroit and Raleigh, N.C., against the franchisees and 24 people who manage or work for them.

Besides defrauding the Treasury out of more than $70 million, the lawsuits also allege some franchise managers and employees received kickbacks from customers for helping them file fraudulent tax returns.

The five sued businesses doing business as Jackson Hewitt are Smart Tax Inc. and Ask Tax Inc. in Chicago; Smart Tax of Georgia Inc. in Atlanta; So Far Inc. in Detroit; and Smart Tax of North Carolina Inc. in Raleigh.

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