Jackson Hewitt Investigation Widens

Two months after the Justice Department filed lawsuits accusing more than 125 franchised offices of tax-prep company Jackson Hewitt of helping falsify tax returns, the company disclosed that it has come under investigation by the Internal Revenue Service. Accrording to The New York Times, the Parsippany, N.J.-based company said that it was cooperating with the IRS inquiry. The four DOJ lawsuits --filed in federal courts in Chicago, Atlanta, Detroit, and Raleigh, N.C. against five corporations operated under franchise agreements with Jackson Hewitt, allege that the businesses cost more than $70 million in losses to the U.S. Treasury. One of the individual defendants, Farrukh Sohail of Atlanta, wholly or partly owned each of the five corporations, with those franchises filing more than 105,000 federal income tax returns last year. According to the complaint, Sohail and other defendants "created and fostered a business environment" at the franchises, "in which fraudulent tax return preparation is encouraged and flourishes." Jackson Hewitt subsequently launched an in-house review of its practices and retained Fred T. Goldberg, a former IRS commissioner, to head the investigation.