Instant Tax Service, which claims to be the fourth-largest tax preparation chain, has consented to a preliminary injunction that bars it from preparing false returns or offering phony loans. A trial on the government's effort to shut down the operation is scheduled to begin on May 20 in Dayton, Ohio.Defendants and their franchisees allegedly lured mostly low-income customers into ITS stores by offering deceptive and misleading loans such as "Instant Cash" or "Holiday" loans, often before the tax return filing season begins. The defendants have denied the government's allegations.
Under the terms of the preliminary injunction, the defendants are barred from preparing false returns or filing returns without customer authorization, along with agreeing not to perform other acts of which they are accused. Instant Tax is also barred from offering loans that rely on a customer's pay stub and must hire a neutral company to conduct secret shopper visits to its offices.