Jackson Hewitt

Type: Private
On the web: http://www.jacksonhewitt.com
Employees: 6,005
Employee growth: (16.1%)

For Jackson Hewitt, there's no season like tax season. The #2 tax preparer in the US behind H&R Block, Jackson Hewitt prepares tax returns for primarily low- and middle-income customers through more than 6,300 offices (primarily franchises), including locations within Wal-Mart Stores and mall kiosks. The firm's tax preparers, which use its proprietary ProFiler decision-tree software, filed more than two million tax returns in the fiscal year ended April 2010. Beset by heavy debt that followed aggressive expansion, Jackson Hewitt filed for Chapter 11 bankruptcy protection in 2011, but emerged later that year.

Key numbers for fiscal year ending April, 2010:
Sales: $213.8M
One year growth: (13.9%)
Net income: ($272.3)M

Officers:
Chair: Margaret Milner (Peggy) Richardson
President, CEO, and Director: Philip H. (Phil) Sanford
EVP, CFO, and Treasurer: Daniel P. (Dan) O'Brien

Competitors:
H&R Block
Intuit
JTH Tax

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Incorporated: 1982
NAIC: 541213 Tax Preparation Services

Jackson Hewitt, Inc. is the second largest tax preparation service in the United States. The company has more than 3,300 franchised outlets in 48 states and the District of Columbia and prepares more than 2.2 million tax returns annually. A quarter of its offices are located inside Wal-Mart and Kmart stores. The company also offers tax refund-anticipation loans, free electronic filing, tax-preparation training, and tax audit representation. Jackson Hewitt was acquired by Cendant Corporation in 1998.

Jackson Hewitt was founded in 1982 by John Hewitt, a former employee of tax-service giant H&R Block. Hewitt, a college dropout, had worked his way up to the position of regional manager after starting with Block in 1969. Feeling that tax preparation could be improved by the use of computers, he worked with his father to create a program that would streamline the client interview process. When they were unable to sell it to Block or other tax services, Hewitt and his wife decided to go into business for themselves. They assembled a group of a dozen investors and purchased the six-location Mel Jackson's Tax Service of Norfolk, Virginia in 1982, later renaming it Jackson Hewitt. For the next several years the company grew slowly, adding a handful of additional outlets.

In 1986, the year the IRS began to experiment with computerized tax filing, Jackson Hewitt began selling franchises. By the following tax season there were 22 offices. In October of 1989 the company received its biggest break to date when the Montgomery Ward department store chain contracted with it to open offices in 169 stores around the country. Ward rival Sears had for years been host to H&R Block in its stores. Unfortunately, the sudden growth surge was too much for Jackson Hewitt to handle, and to avoid entering bankruptcy during the height of tax season the firm closed 67 offices. By the end of 1990 the company had made a return to profitability, however, and eventually opened more locations in Ward stores.

Jackson Hewitt's competitive edge was provided by its Hewtax Software (later known as ProFiler), which took a tax preparer through a series of questions. Each response generated additional queries depending on the answer, a so-called "decision tree" format. An affirmative response to a question about stock ownership, for example, would trigger more specific questions about the stock. The software could also transfer all of the appropriate information to the state tax form from the federal one, as well as yield a completed electronic return that could be filed instantly to expedite a client's refund. Hewitt claimed that use of the software saved it 10 percent in labor costs. It also required less training time for new employees than industry leader Block (which was still not fully computerized) and resulted in more consistent results for customers.

By the 1992 tax season the Jackson Hewitt chain had grown to 515 offices in close to 30 states, up from 299 locations the year before. The company itself owned less than 5 percent of the total. It prepared 311,000 returns for taxpayers during the year, which helped yield annual revenues of $7.4 million and net earnings of $182,000. Industry leader H&R Block was still far larger, with more than 7,000 locations and revenues of $699 million, but Jackson Hewitt had nonetheless become the country's second largest tax preparation chain. The following year saw the company raise $2.5 million in funds for expansion from a venture capital company and move into new headquarters in Virginia Beach, Virginia.

The company's franchisees often came from the ranks of its preparers, ten of which worked at an average outlet. Jackson Hewitt put the seasonal workers through its own "tax school" to prepare them for the 13- to 15-week tax season in the winter and early spring of each year. The school also was offered to the general public for those who wished to learn more about doing their own taxes--and Jackson Hewitt actively recruited from such students to find its own employees. Work as a tax preparer meant long hours and occasional stress as taxpayers argued over the legitimacy of their deductions. The company put boxes of tissue around its offices for clients who became teary-eyed when they did not get the tax breaks they had hoped for. For a franchisee, the startup cost was between $35,000 and $50,000, which included a $20,000 franchise fee and the costs of renting office space and purchasing equipment. Jackson Hewitt took a 12 percent royalty out of the office's earnings, and also charged 6 percent for advertising costs.

The company, with 900 offices in 37 states by 1993, was beginning to get noticed by the media. Jackson Hewitt was ranked 18th best franchiser in Success magazine and was listed as one of Inc. magazine's 500 fastest-growing private companies. The firm soon began making plans to go public, which took place in January of 1994 on the NASDAQ exchange. No new stock was issued, however, with the company's 700 investors' private shares simply converted into public ones. The move was made in part because the firm's accounting requirements were already close to those of public firms, and also to boost its profile to spur more franchise sales. During 1994 Jackson Hewitt experimented with operating several locations as combined tax office/mail service firms, seeking to give the company's franchisees additional sources of revenue during the eight months of the year when there was little work. Most of the company's income came during the fourth quarter of the fiscal year, with losses generally reported for the first three.

In early 1994 Jackson Hewitt made a deal to set up offices in some Sam's Club stores on a trial basis. The company hoped that it would lead to a systemwide contract with sister chain Wal-Mart, which could mean as many as 400 additional locations. The test was a success, and in the fall Jackson Hewitt made plans to open 18 offices in Wal-Mart stores, leasing space for use as combined tax preparation and business/mail service sites. The company also filed suit against H&R Block during the year, alleging that the industry leader's ad slogan "Nothing's Faster, Nothing's Easier" was untrue, as Jackson Hewitt's service was both faster and easier than Block's. The suit was dropped after a federal judge refused to halt the $5.5 million ad campaign.

Jackson Hewitt received more unwelcome news in 1995 when a change in federal tax rules eliminated an automated "direct deposit indicator" for refunds, which had been used by the firm and its associated lenders to pre-approve clients for the popular refund anticipation loans that were offered for a fee. Income from these loans, which had become a welcome service for many cash-strapped taxpayers, accounted for nearly a quarter of the company's $18.6 million in 1994 annual revenues. After the rule change, Jackson Hewitt was forced to raise its requirements for the loans, which reduced the number of applicants eligible for them. Although many taxpayers were able to switch to the firm's "accelerated check" refunds, this was less profitable for the company. The 1995 tax season proved a difficult one for all concerned, angering those taxpayers who found out they would not get instant tax refunds, as well as others whose checks were partially held back due to additional last-minute IRS rule changes. In some locations customers threatened company employees with violence, and a near-riot at a Florida office required police intervention.

At the end of the 1995 filing season, Jackson Hewitt, "battered" by the effect of the tax rule changes, according to CEO John Hewitt, was hanging on by a thread. The firm's franchisees reportedly had not paid $3.5 million in fees to the company, which soon was nearing default on several loans from NationsBank. During the remainder of the year, 96 offices were closed. There was a management shakeup as well, and the firm began seeking a new CEO, with John Hewitt shifting his focus to long-term strategy from day-to-day operations. In June of 1996 newcomer Keith Alessi, who had most recently served as vice-chairman of supermarket chain Farm Fresh, Inc., was appointed to the top post. Three months later John Hewitt resigned from the company. Vowing to remain in the tax business, Hewitt later announced plans to form tax preparation services in Canada, England, and Australia, with the United States to follow when a two-year noncompete period was over.

The 1996 and 1997 tax seasons saw the company's fortunes improve dramatically, with earnings figures up and franchise numbers jumping from less than 1,400 to about 1,900. The 1997 total included 300 new locations inside Wal-Mart stores, where there were now 500 Jackson Hewitt offices chainwide. Federal tax changes that made filing more complicated played into the company's hand, with more taxpayers feeling the need to seek professional assistance. The firm's stock price began to soar, and one million new shares were offered in the summer, raising more than $18 million. By October the share price had grown tenfold since the beginning of the year, reaching $50.

In December the company announced that it was being acquired by HFS Inc. for $480 million, which further boosted the share price. Before the sale was complete, HFS merged with another firm and changed its name to Cendant Corporation. Cendant owned a number of well-known franchise operations, including Ramada Inn, Days Inn, Avis Rent-A-Car, and realty chains Coldwell Banker and Century 21. In March of 1998, following completion of the acquisition, CEO Keith Alessi left Jackson Hewitt to head financially troubled TeleSpectrum Worldwide Inc. of Pennsylvania. With his stock options and a number of shares purchased on the open market, Alessi reaped a $20 million payoff from his time with Jackson Hewitt.

Under Cendant the company instituted a strategy of aggressive expansion. A total of 1,000 new offices were added by the start of the 1999 tax season, bringing the company up to a total of nearly 3,000. Experiments with kiosk locations in shopping malls and offices at Century 21 real estate agencies also were being tried. A national advertising campaign was soon launched, using the theme "Because you work hard for the money, we're going to work hard for you." The ads were targeted at both general and Hispanic audiences, with several television spots shown during Super Bowl pre-game programs. The company's customer base was, in large part, middle- and low-income taxpayers, many of them Hispanic Americans, who found it worth the typical fee of $100 to $150 to avoid having to navigate the increasingly complicated tax codes, as well as to get an accelerated refund check.

Following the 1999 tax season Jackson Hewitt named Daniel Tarantin president and moved the company's headquarters to Cendant's home base of Parsippany, New Jersey. The company also earmarked $30 million for the acquisition of independent tax preparation offices through Tax Services of America, which was its largest franchisee and partly owned by the firm. The company was now actively selling all of its remaining centrally owned locations. Meanwhile, deposed founder John Hewitt's startup Liberty Tax Service had grown into the third largest tax preparation chain in the United States, and he soon leased the former headquarters site of Jackson Hewitt in Virginia Beach, Virginia, vowing to beat the company that had spurned him.

In 2001 the company began opening offices in Kmart stores around the United States, following a successful trial run in select cities. The year also saw several new initiatives, including the issuance of MasterCard cash cards so customers could draw on their accelerated refund accounts, and the creation of a Premier Tax Service to handle more complicated returns. Some Jackson Hewitt locations began to offer ATM machines where clients could cash their refund checks on-site, as well. Independent tax service acquisitions continued throughout the year, with more than 3,300 offices, owned by 600 franchisees, operational by year's end. The company reported that it had handled a record 2.2 million returns during the 2001 tax season.

With the backing of Cendant, Jackson Hewitt was aggressively nipping at the heels of industry giant H&R Block. The company's future growth would continue to be dependent on the whims of the IRS to some extent, but it appeared clear that increasing numbers of Americans were becoming accustomed to hiring a service to do their taxes and to expedite their refund.

Principal Competitors

H&R Block, Inc.; Liberty Tax Service.

Further Reading

DeKok, David, "Tax Firm Moves to Add More Franchises," Sunday Patriot-News Harrisburg, June 16, 1996, p. D1.

Gore, Mollie, "Although a Distant Second, Service Has Eye on Leader," Richmond Times-Dispatch, September 17, 1992, p. B10.

Hock, Sandy, "Jackson Hewitt Shops for Clients at 18 Wal-Marts," Accounting Today, October 10, 1994, p. 1.

Hoene, Nancy, "Tax Firms Brace for Rush," Capital Times, March 10, 1999, p. 1C.

"It's Taxing to Challenge H&R Block Expansion," Los Angeles Times, March 4, 1993, p. 7.

Klein, Melissa, "Jackson Hewitt Plans Franchise Rollups," Accounting Today, April 17, 2000, p. 1.

Knight, Jerry, "A New Tax Bill? Another Boost to Jackson Hewitt," Washington Post, July 14, 1997, p. F25.

Mayfield, Dave, "Jackson Hewitt Launches Program to Reduce its Costs," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), September 20, 1995, p. D1.

------, "Jackson Hewitt Seeks New Chief Executive," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), December 16, 1995, p. D1.

------, "Maturing of Founder and Firm," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), November 14, 1993, p. E1.

------, "Tax Season Turns Tumultuous," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), February 19, 1995, p. D1.

Miller, Tracy L., "Jackson Hewitt Sold to HFS for $480 Million," Accounting Today, December 15, 1997, p. 1.

Richman, Tom, "The Best of Intentions: It's Not Enough to Do Well, You've Got to Know How," Inc., April 1, 1991, p. 109.

Russell, Roger, "Jackson Hewitt Expansion Adds Locations, New Services," Accounting Today, February 12, 2001, p. 10.

Shean, Tom, "HFS to Buy Jackson Hewitt," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), November 20, 1997, p. D1.

------, "The Ins and Outs of Franchising," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), May 19, 1997, p. D1.

------, "Jackson Hewitt to Sell Shares," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), July 29, 1997, p. D1.

------, "New Chief Remaking Tax-Preparation Service," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), January 19, 1997, p. D1.

------, "Preparing a National Strategy," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), October 5, 1998, p. D1.

------, "Tax Service CEO Moves On," Virginian-Pilot and The Ledger-Star (Norfolk, Va.), March 25, 1998, p. D1.

Swardson, Anne, "Competitor Hewitt Hopes Computers Will Snare Bigger Block of Returns," Washington Post, April 3, 1998, p. H2.

— Frank Uhle

Jackson Hewitt Tax Service, Inc.

Type	Public
Founded	Norfolk, Virginia USA, (1982)
Headquarters	Parsippany, New Jersey USA
Key people	President and CEO: Phillip H. Sanford[1]  ; Executive Vice President, Chief Financial Officer and Treasurer: Daniel O'Brien; SVP Franchise Operations and Sales: Duane R. Mora;
Products	Financial Services Tax Preparation Refund anticipation loans Franchises
Revenue	$213.8 million USD (2010)
Net income	$7.5 million USD (2010)
Website	www.jacksonhewitt.com

Jackson Hewitt office, Wayne, Michigan

Jackson Hewitt Tax Service Inc. is the second largest tax preparation service in the United States; responsible for preparing over 2.2 million computerized federal, state, and local individual income tax returns each year. Based in Parsippany, New Jersey, the company currently operates more than 5,802 franchise outlets and 724 owned offices, in 48 states and the District of Columbia. Roughly a quarter of Jackson Hewitt’s offices are located inside Wal-Mart and Kmart stores. Jackson Hewitt offers tax refund-anticipation loans, free electronic filing, tax-preparation training, and tax audit representation.^[2]

In January 1998, The Cendant Corp., a consumer conglomerate, purchased Jackson Hewitt in a deal valued at approximately $480 million.^[3] In 2004, Jackson Hewitt Tax Service Inc. was spun off as a separate company.^[4]

Contents 1 History 1.1 Founded 1.2 Expansion 1.3 Cendant 1.4 At Its Peak 2 Default 3 Products and services 3.1 Tax Return Preparation 3.2 Financial Products 3.3 Franchise Sales 4 Investigation 5 References 6 External links

History

Founded

Jackson Hewitt was founded in 1982 by former H&R Block employee John Hewitt. After working in the tax preparation industry for 13 years, he came to the conclusion that tax preparation process could be improved by using computers, and so worked with his father to design a program that streamlined the client interview process. But he was unable to sell it. As a result Hewitt and his wife went into business for themselves. The two assembled a dozen investors, purchased the six-location, Norfolk, Virginia-based Mel Jackson's Tax Service and re-named it Jackson Hewitt.^[5]

For the next few years their company grew slowly, adding a handful of additional outlets.^[6]

Expansion

In 1986, the same year the IRS first began to experiment with computerized tax filing, Jackson Hewitt began selling franchises.^[7] By the following tax season there were 22 offices. Then in October 1989 the Montgomery Ward department store chain contracted with Jackson Hewitt to open offices in 169 stores across the United States. Ward’s rival Sears had for years been host to H&R Block in its stores. Unfortunately, the sudden growth was too much for the burgeoning company to handle and so, to avoid entering bankruptcy during tax season Jackson Hewitt closed 67 of those offices. But by the end of 1990 the company had returned to profitability, however, and even opened more locations in Montgomery Ward stores.

By 1992 Jackson Hewitt had 515 offices in almost to 30 states and was preparing 311,000 returns for taxpayers per year. Making it second largest tax preparation chain in the United States. During The following year the company raised funds for expansion and moved into new headquarters in Virginia Beach, Virginia. And by 1993, the company had 900 offices in 37 states. In January 1994 the company went public but no new stock was issued, and the company's 700 investors' private shares simply converted into public ones. During that same year Jackson Hewitt made a deal to set up offices in Sam's Club stores on a trial basis. The trial was a success, and later that year Jackson Hewitt launched plans to establish 18 offices in Wal-Mart stores, leasing space for use as combined tax prep and business mail service sites.

Cendant

In December 1997 Jackson Hewitt announced that it was being acquired by HFS Inc. for $480 million. Before the sale was complete, HFS merged with another firm and changed its name to Cendant Corporation. Cendant owned a number of franchise operations, ranging from Ramada Inn, Days Inn, and Avis Rent-A-Car to chains like Coldwell Banker and Century 21. Under Cendant Jackson Hewitt opened a total of 1,000 new offices, and started experimenting with kiosk locations in shopping malls and offices at Century 21 real estate agencies. Following the 1999 tax season Jackson Hewitt moved its headquarters to Cendant's home base in Parsippany, New Jersey and started acquiring of independent tax preparation offices through its largest franchisee, Tax Services of America. Meanwhile, founder John Hewitt's Liberty Tax Service had grown into the third largest tax preparation chain in the United States

Starting in 2001 Jackson Hewitt began opening offices in Kmart stores. 2001 also saw the launch of several new initiatives, such as the issuance of MasterCard cash cards – so that their customers would have easier access to accelerated refund accounts – as well as the creation of a Premier Tax Service for complex returns. Some Jackson Hewitt locations began to offer ATMs where clients could cash their refund checks on-site, as well. Independent tax service acquisitions continued throughout the year, with more than 3,300 offices, owned by 600 franchisees.^[8]

By year's end the company was handling 2.2 million tax returns a year.

At Its Peak

Jackson Hewitt was the second largest tax preparation firm in the United States, Jackson Hewitt Tax Services Inc. The firm prepared some 3.4 million tax returns for low- and middle-income customers through more than 7,400 franchised company-owned offices, including locations within Kmart, Wal-Mart Stores and mall kiosks.

Jackson Hewitt maintained two business segments: its franchise operations – consisting of its franchise business and associated royalty, marketing-advertising revenue, financial product fees and other revenues and its company owned income tax return preparation offices. During 2008, Jackson Hewitt maintained company-owned offices in 28 markets across the United States and 5,763 franchised offices – responsible for preparing 87% of the total number of tax returns prepared by its network. Jackson Hewitt Inc. operates as a wholly owned subsidiary of Jackson Hewitt. Its company-owned office operations are conducted through a wholly owned subsidiary of Jackson Hewitt Tax Services Inc., Tax Services of America, Inc.

The company recently partnered with the Magic Johnson Foundation to create Community Empowerment Centers to offer comprehensive tax information seminars and financial educational resources in Sacramento, Houston, Chicago, New Orleans and Cleveland. The free seminars offer individuals in underserved communities basic tax information and budget planning resources. For instance, each attendee receives free access to the Jackson Hewitt Money Manager, a Web-based home budgeting tool that helps users create and manage a budget and a detailed savings plan.^[9]

Default

The company negotiated out of a default on its debt in May 2009 and technically defaulted for several days in May 2010 (though an agreement with creditors was announced within one week of the 'default').^[10]

On May 4, 2011 the company announced it had agreed to a 20 day extension of its debt under its various credit agreements with Wachovia/Wells Fargo Bank. The company mentioned at that time that it was considering many options including a prepackaged bankruptcy filing. On Friday, May 20, 2011 the extension expired and the company had yet to file for bankruptcy protection or to announce another extension of its debt.

On May 7, 2011 Jackson Hewitt ceased being traded on the New York Stock Exchange. The ending share price was $.19. On May 9, 2011 the symbol for the stock was changed from JTX to JHTX and is being traded on a different stock exchange. On Tuesday, May 24, 2011, Jackson Hewitt officially filed for bankruptcy.^[11]

Products and services

Tax Return Preparation

Jackson Hewitt provides its customers with tax return preparation services and electronic filing. Through the use of their tax software, ProFiler, the company provides computerized federal income tax preparation, state income tax, and individual tax preparation services.

Financial Products

Jackson Hewitt maintains contractual arrangements with various financial institutions Santa Barbara Bank & Trust, a division of Pacific Capital Bank, N.A. (SBB&T) and HSBC Taxpayer Financial Services, Inc. (HSBC) to provide many of the financial products, including Refund Anticipation Loans, to their customers.^[12] In August 2010, the Internal Revenue Service announced its intention to discontinue the provision of the debt indicator to tax return preparers. ^[13] The debt indicator is a significant part of the provision of refund anticipation loan funding and its lack of availability is expected to increase the cost of such products to consumers and decrease the level of their availability.

Franchise Sales

The company supports more than 5,763 franchise locations throughout the United States. Startup costs range from around $50,000 to $100,000 per franchise. Jackson Hewitt maintains a franchisee Web portal..^[14]

Investigation

On April 3, 2007, the United States Justice Department announced that the federal government has filed civil injunction suits alleging tax fraud by five corporations owned or partly owned by Farrukh Sohail. According to the four lawsuits filed in federal courts in Chicago, Atlanta, Detroit and Raleigh, N.C, the corporations operate under franchise agreements with Jackson Hewitt Tax Services Inc. On September 28, 2007 the Department of Justice announced that it had reached settlements with each of the defendants in the case. Under the settlement agreements the majority owner, Farrukh Sohail, of each of the businesses will be barred from preparing tax returns for five years, roughly 15 of Mr. Sohail's employees have been permanently enjoined from preparing tax returns. Neither Mr. Sohail nor his incorporated businesses will pay any financial penalties under the settlement agreement, indicating that the fraud committed was not done so with the consent of senior management in Mr. Sohail's business.

According to the complaint, Farrukh Sohail of Atlanta and other defendants "created and fostered a business environment" at the Jackson Hewitt franchises "in which fraudulent tax return preparation is encouraged and flourishes." According to court documents, examples of alleged fraud include filing false returns claiming refunds based on phony W-2 forms; using fabricated businesses and business expenses on returns to claim bogus deductions; claiming fuel tax credits in absurd amounts for customers clearly not entitled to any credits; and massive fraud related to claiming the federal Earned Income Tax Credit.

The suits allege that Farrukh Sohail wholly or partly owns each of the five corporations, and that the corporations prepared and filed more than 105,000 federal income tax returns in 2006. The five corporations allegedly operate more than 125 Jackson Hewitt retail tax preparation stores in the Chicago, Atlanta, Detroit and Raleigh-Durham, N.C., areas.

One complaint cites a Jackson Hewitt franchise customer whose Jackson Hewitt-prepared tax return stated he was a barber entitled to a fuel tax credit for buying 25,000 gallons of gasoline for off-highway business use. The complaint alleges that the customer would have had to have driven 1,370 miles (2,200 km) each day, seven days a week, to consume that much fuel in one year, leaving little if any time to cut hair.

The suits further allege that some of the Jackson Hewitt franchises' managers and employees received kickbacks from customers for helping the customers file fraudulent tax returns. The suits further allege more than $70 million in combined losses to the U.S. Treasury, and seek court orders barring the franchises and other defendants from preparing tax returns for others. "Preparing federal income tax returns based on falsehoods and fabrications is a serious violation of the law," United States Assistant Attorney General Eileen O'Connor said in a statement.

On Apr 4, 2007, Jackson Hewitt's standing rebounded on after the tax fraud investigation appeared more limited than initially feared^[15]

On April 5, 2007, Jackson Hewitt Tax Services announced that it had hired Fred Goldberg, an ex-commissioner of the Internal Revenue Service, to investigate the federal allegations of massive tax fraud. "We have launched this internal review to investigate the specific allegations against one of our franchisees," Michael Lister, president and CEO of Jackson Hewitt Tax Services said in a statement.^[16] The internal probe is being conducted by Fred Goldberg, a partner at the law firm Skadden, Arps, Slate, Meagher & Flom. Mr. Goldberg was IRS commissioner from 1989 to 1992. He was also chief counsel of the IRS and assistant secretary of the Treasury for tax policy.

"USA Today quotes court papers stating that at one Jackson Hewitt location, "managers frequently explain to employees that (the outlet) will lose business if [it] turns away customers suspected of providing fraudulent information [. . .] The managers therefore directed employees not to question or turn away such customers, but instead prepare and file their tax returns.".^[17] Presently, IRS regulations only bar a tax preparer from preparing a tax return if they have direct knowledge that the tax return is fraudulent. Merely believing that a tax return may be fraudulent does not bar a tax preparer from preparing the return.

In June 2007, the federal government widened its probe into whether Jackson Hewitt helped customers file fraudulent returns to obtain bigger refunds, and the company acknowledged in its SEC regulatory filing that Jackson Hewitt and an unspecified number of its franchisee and company-owned stores now are being investigated by the IRS.^[18]

On September 6, 2007 Jackson Hewitt said that their internal review found no evidence its employees knew of the scheme that led to U.S. Department of Justice lawsuits. The internal review led by former Internal Revenue Service Commissioner Fred Goldberg: "… did not find evidence of corporate employee participation in, or knowledge of, the allegedly fraudulent tax return preparation activities."^[19]

References

1. ^ http://www.prnewswire.com/news-releases/jackson-hewitt-names-philip-h-sanford-president-and-ceo-113001519.html
2. ^ http://finance.aol.com/quotes/jackson-hewitt-tax-services-inc/jtx/nys
3. ^ Gilpin, Kenneth N. (November 20, 1997). "HFS to Buy Tax Preparer, Jackson Hewitt, for $480 Million". The New York Times. http://www.nytimes.com/1997/11/20/business/hfs-to-buy-tax-preparer-jackson-hewitt-for-480-million.html. 
4. ^ http://www.jacksonhewitt.com/secondary.aspx?id=10294
5. ^ http://hamptonroads.com/2009/04/return-taxmaster
6. ^ http://en.wikipedia.org/w/index.php?title=Jackson_Hewitt&action=submit#cite_note-1
7. ^ http://www.entrepreneur.com/franchises/jacksonhewitttaxservice/282470-0.html
8. ^ http://www.answers.com/topic/jackson-hewitt-tax-service-inc
9. ^ "Jackson Hewitt Tax Service(R) Supports the Magic Johnson Foundation with Financial". Reuters. February 19, 2009. http://www.reuters.com/article/pressRelease/idUS206621+19-Feb-2009+PRN20090219. 
10. ^ 20
11. ^ "Good riddance, Jackson Hewitt". Crain's New York Business. May 24, 2011. http://mycrains.crainsnewyork.com/in_the_markets/2011/05/good-riddance-jackson-hewitt.php. 
12. ^ "Company Search". Reuters. http://www.reuters.com/finance/stocks/companyProfile?symbol=JTX.N&rpc=66. 
13. ^ IR-2010-89, Aug. 5, 2010
14. ^ http://www.franchise.org/Jackson_Hewitt_Tax_Service_franchise.aspx
15. ^ "Jackson Hewitt Rebounds". Forbes. April 4, 2007. http://www.forbes.com/2007/04/04/taxes-jackson-hewitt-markets-equity-cx_af_0404markets18.html. 
16. ^ Jackson Hewitt - Press Release
17. ^ Johnson, Kevin (April 4, 2007). "Feds say tax preparers claimed $70M in bogus deductions". USA Today. http://www.usatoday.com/money/perfi/taxes/2007-04-03-tax-fraud-schemes_N.htm. 
18. ^ Johnson, Linda A. (June 5, 2007). "Jackson Hewitt says federal probe widens". USA Today. http://www.usatoday.com/money/economy/2007-06-05-4198962175_x.htm. 
19. ^ "UPDATE 2-Jackson Hewitt finds no wrongdoing in fraud probe". Reuters. September 6, 2007. http://www.reuters.com/article/governmentFilingsNews/idUSBNG13044720070906. 

External links

• Official Jackson Hewitt Site

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