Back in January, I wrote a blog post called RAL Bounce about a problem some Instant Tax Service clients had had with their refund loan checks bouncing. My point was that the RAL weren’t completely dead because there were finance companies that would fill the void.
Shortly after that, I heard from Todd E Bryant the General Counsel for Instant Tax Service asking that I remove or correct my post based on info he provided. Instead I added his e-mail to the original post.
I didn’t hear from Mr. Bryant again but I continued to hear a lot about Instant Tax Service and the problems their customers were having. Customers were complaining about returns being filed without their knowledge, outrageous preparation fees, and their checks being held hostage. When they tried to contact Instant Tax Service, they couldn’t get their problems solved. In some cases, the offices had to hire security to keep angry clients under control.
Well, Mr. Bryant will be keeping busy because the Justice Department has filed a permanent injunction against Instant Tax Service, the owner Fesum Ogbazion and several franchisees. A couple points from the injunction:
- Instant Tax Service uses its false and deceptive loan products principally to lure customers into its local stores so that franchisees may charge them unconscionably high tax preparation fees and added fees. Ogbazion calls the added fees “junk fees” and “revenue generators.” The junk fees include bogus charges for: “service bureau,” “document preparation,” “refund estimate,” “technology/software,” “account set up,” “check printing,” and “Efile/electronic transmission.” Collectively, the tax preparation and junk fees charged by Instant Tax Service typically average $400–$500, and sometimes run as high as $1,000 or more, for as little as 15 minutes of return preparation.
- Although Instant Tax Service boasts of being one of the fastest growing tax preparation franchises and “Entrepreneur Magazine’s top new franchise,” it has been overwhelmed for years with complaints from taxpayer customers about poor service, incompetence, and most predominantly, fraud. For instance, in the past 36 months consumers filed over 900 complaints with the Better Business Bureau in 48 service areas across the country covering Instant Tax Service stores nationwide. Hundreds of additional complaints have been posted to online consumer protection forums such as “The Ripoff Report.” And Instant Tax Service offices nationwide have been the subject of numerous local TV news consumer fraud reports. Most of the complaints focus on Instant Tax Service stores filing tax returns without the customers’ knowledge or consent, making false and deceptive representations to customers, and charging unconscionably high and undisclosed fees. Moreover, IRS audits of individual Instant Tax Service customers, as well as other efforts by the IRS to monitor Instant Tax Service’s compliance with the internal revenue laws, demonstrate systemic misconduct by Instant Tax Service locations nationwide.
We may see the end of Instant Tax Service but we can expect that someone will take their place. Taxpayers-please know what you are signing when you get a pre-tax season loan, look at the fees they are charging you, and get copies of anything you sign. Better yet, avoid the pre-season loans and find a reputable preparer to help you with your taxes.