The U.S. Department of Justice has asked a federal court in Fresno, Calif., to bar the former manager of a Jackson Hewitt franchise from preparing federal income tax returns.

The government's alleges that during last year's filing season, David Meals, a former IRS employee, personally prepared or supervised other Jackson Hewitt employees who prepared more than 100 federal income tax returns falsely claiming tax exemption for casino-gaming proceeds paid to members of the Tachi Yokut Indian Tribe.

The complaint states that the returns improperly sought more than $826,000 in tax refunds. According to the suit, the Hanford, Calif., Jackson Hewitt office prepared 40 of the improper returns, and Meals falsely advised employees he supervised that Native American casino distributions are exempt from federal tax.

Native Americans must pay federal income taxes on income they earn or receive unless the express language of a statute or treaty exempts it from taxation. The federal Indian Gaming Regulatory Act, which regulates tribes' operation of casinos, allows tribes to distribute gaming proceeds to tribe members only if the tribes treat the income as taxable and advise tribe members that the income is taxable.

The suit did not allege any wrongdoing by the New Jersey-based franchiser Jackson Hewitt Tax Services Inc.The case is the second injunctive action brought this year involving a Jackson Hewitt franchise in which the government has alleged that prepared federal income tax returns improperly claimed that casino distributions to Native Americans are not taxable.

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