Federal Injunction Permanently Closes Instant Tax Service!

A federal district court in Ohio has issued a permanent injunction  ordering ITS Financial LLC, the parent company of Instant Tax Service  tax franchiser, to cease operations. The order, which was issued as a  result of a two-week trial in June, also bars Fesum Ogbazion, the sole  owner and CEO of ITS Financial, from operating or being involved with  any business relating to tax-return preparation.

ITS Financial, which claims to be the fourth largest tax-preparation  business in the country, had more than 150 franchisees that filed more  than 100,000 tax returns each year in 2011 and 2012. Ogbazion also
owned two other entities, Tax Tree LLC and TCA Financial LLC, that were also  shut down.

The Justice Department cited a long list of the company’s transgressions, including:
 

• Filing tax returns for customers without their permission and encouraging franchisees to do the same;
   
• Training and encouraging franchisees to prepare and file tax returns prematurely with paycheck stubs that omitted and understated income, resulting in  submitting false federal tax returns; 
  
• Defrauding their largely low-income customers by marketing fraudulent loan  products to lure them into their tax-preparation offices and by requiring franchisees to charge phony and exorbitant fees;
   
• Forging customers’ signatures on loan checks that were then used to fund Ogbazion’s businesses;
   
• Failing to pay more than $1 million of the businesses’ employment taxes, lying  about assets, and hiding money in a secret bank account; 
  
• Lying on government forms and encouraging franchisees to do so as well;
   
• Obstructing government agents, including the IRS, and circumventing law-enforcement efforts involving the suspension of electronic filing identification  numbers;
   
• Telling franchisees to lie to the IRS during IRS compliance visits.

The court cited an IRS study that showed that the tax harm the company’s  franchisees caused in just five cities during a single filing season was between $10 million and $25 million. The company also had failed to 
comply with the terms of a preliminary injunction order that the company had agreed to in October 2012.

In a Justice Department press release, Assistant Attorney General Kathryn Keneally  said of the company, “As described by the court, this company grew large through abhorrent means—filing returns without customer authorization,  forging customer signatures, pushing fraudulent loan products, and much  more. As the court’s decision recognizes, a business model based on false and fraudulent conduct cannot be allowed to prevail.”