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Jackson Hewitt Faces NY Class Action

November 20, 2006

Jackson Hewitt • Feds Sue Jackson Hewitt, Claiming "Pervasive" Tax Fraud • Jackson Hewitt Pays $5 Million to Settle California Charges • Jackson Hewitt Faces NY Class Action • Consumer Complaints --- • More about Tax Preparation ...

A consumer lawsuit in New York charges that the owners of more than 60 Jackson Hewitt tax-preparation outlets have ripped off low-income clients with hidden fees, reaping millions of dollars illegally.

The suit charges that customers of Jackson Hewitt Tax Service franchises owned by Mandeep Sobti and his wife, Anjeet, have been secretly socked with an extra charge of 15 percent of their total bill.

The suit also alleges that customers who sought "refund anticipation loans" were charged an undisclosed extra fee $25 to $50. Customers were routinely billed $49 for long state tax returns, when they qualified to file short forms for a $40 fee, the suit says.

"These responsible taxpayers were taken advantage of by the company padding its preparation fees without their knowledge," attorney Alan Ripka told the New York Post. His class-action suit seeks millions of dollars in restitution for thousands of customers allegedly overcharged by the Sobtis.

Sobti denied the charges.

Ripka said the alleged scheme came to light when Sobti employees noticed that computerized files showed a mysterious "115 percent multiplier" automatically tacked onto each customer's charges, plus other extra fees. But all were lumped into a total "tax preparation" charge on customer bills.

The suit also names parent firm Jackson Hewitt Tax Service Inc., the second largest tax-preparation company after H&R Block.

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