A federal court in Indianapolis has barred David Ray Franklin and his company, Instant Refund Tax Service (IRTS) – which does business as Instant Tax Service—from preparing tax returns and from operating a tax-preparation business, the Justice Department announced today. Instant Tax Service is a national tax-preparation chain operated by ITS Financial LLC, based in Dayton, Ohio. A federal court entered a preliminary injunction against the Ohio firm and its owner last November.
The Indiana preliminary injunction order, which remains in effect pending final resolution of the civil lawsuit, was signed by Judge Sarah Evans Barker of the U.S. District Court for the Southern District of Indiana. The court also permanently barred an alleged IRTS manager, William Brown, from preparing federal tax returns for others. The defendants consented to the court orders without admitting the allegations against them.
The government complaint in the case alleges that Franklin owned and operated 22 Instant Tax Service locations that prepared and filed over 10,000 federal tax returns in 2010 and 2011 combined. Brown allegedly worked for Franklin and managed one of Franklin’s busiest Instant Tax Service offices. The United States accused Franklin’s offices and Brown of preparing false and fraudulent income tax returns for customers, fabricating income for phony businesses to obtain larger tax credits, forging forms W-2, filing returns improperly based on paycheck stubs rather than W-2 wage statements, claiming false education tax credits and reporting false filing status. The complaint also alleged that Franklin’s offices filed tax returns without authorization and sold false and deceptive loan products to Instant Tax Service customers.
The case is one of five similar civil actions that the Justice Department brought against Instant Tax Service franchises and the corporate franchisor, ITS Financial, which claims to be the fourth-largest tax-preparation firm in the nation. The trial on the government’s request in the Ohio case to permanently shut down the Instant Tax Service franchisor is scheduled for May.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. More information about those cases is available on the Justice Department website