A Nevada federal court has barred Benyam Tewolde from preparing tax returns for others, the latest in a series of legal efforts against preparers affiliated with the Instant Tax Service chain.
Tewolde and his wife, Yordanos Kidanits, are the alleged co-owners of an Instant Tax Service franchise that operates at multiple locations in the Las Vegas area (ITS is a nationally franchised tax preparation company based in Dayton, Ohio). Kidantis and the franchisee, Koraggio LLC, were also permanently enjoined from engaging in certain abusive practices. The civil injunction orders, to which the defendants consented without admitting the allegations against them, were signed on December 27.
According to the government complaint, the defendants helped employees at their ITS franchise offices to engage in a variety of misconduct, including preparing phony return forms with fabricated businesses and income, falsely claiming education credits, claiming false filing status and false dependents, selling deceptive loan products, filing returns without customer consent or authorization, and preparing bogus W-2s based on information from employee paystubs.
The complaint further alleged that Tewolde personally prepared fraudulent returns. The injunction permanently bars Tewolde from preparing or filing federal tax returns for others, training tax preparers, and owning or managing a tax-prep business. Kidane and Koraggio are also enjoined from violating the federal tax laws and consumer protection laws. The court order requires them to hire a monitor at their expense who will periodically report to the Justice Department to ensure compliance, and the order also bars Kidane and Koraggio from marketing abusive loan products, including holiday, or instant cash loan or advance products offered to customers based on information obtained from the customer’s paystub.
The case is one of five similar suits that the Justice Department brought against ITS franchises earlier this year. A trial on the government’s request to shut down the ITS franchisor permanently is scheduled for May.