Jackson Hewitt Tax Service said it has completed its internal review of fraud allegations by the Justice Department against several of its franchisees and said its corporate employees were not involved.

The review, led by former Internal Revenue Service Commissioner Fred Goldberg, Jr., did not find evidence of the tax prep chain's corporate employees participating in or knowing about the fraudulent activities. In April, the Justice Department filed lawsuits claiming that 125 of the company's franchise offices fostered a business environment that encouraged fraudulent tax preparation, and the IRS soon joined the probe (see Jackson Hewitt Investigation Widens).

After the internal review, the tax prep chain said it would develop monitoring tools, increase the training of its franchisees and preparers, and educate its customers better about the Earned Income Tax Credit.

Jackson Hewitt has also hired Thomas Smith, a former IRS executive, as its chief tax compliance officer. The company said it was continuing to cooperate with the IRS on the matter and expected it to be resolved in the next 30 to 60 days. The company is taking a charge of $6 million for the costs of the internal review.

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