Instant Tax Service ("ITS"), the fourth-largest tax preparation business in the United States, has been ordered by a federal court judge to shut down its operations.
U.S. District Judge Timothy S. Black found that ITS had a culture of "fraud and deception." The order, which was quite extraordinary, was said to be "necessary to protect the public and the Treasury."
According to the complaint (downloads as a pdf), ITS engaged in a pattern of false and deceptive practices in all facets of its operations – from marketing the franchises to the preparation of returns and the offering of loan products.
ITS marketed its franchises to practically anyone who could afford to pay the fees, no matter whether they were otherwise qualified. According to the complaint, ITS touted its franchise to potential owners as so simple that, "[n]o tax experience [is] necessary!" ITS claimed that it would train franchisees all they needed to know: they received just seven hours of training related to tax instruction. ITS also ignored its own background checks, setting up a franchise in at least one case with a known felon.