Watts v. Jackson Hewitt Tax Services, Inc.
Wolf Popper has brought a federal class action against Jackson Hewitt Tax Service Inc., and certain of its franchisees. The case was filed in the United States District Court for the Eastern District of New York, and is titled Watts, et al. v. Jackson Hewitt Tax Service Inc., et al., 06-cv-6042 (DLI) (SMG).
In the action, plaintiffs allege that Jackson Hewitt advertises minimum prices for long form and short form tax returns, and that, although Jackson Hewitt claims that the prices are subject to change based on the complexity of the tax return, it charges customers various hidden fees unrelated to the complexity of the tax return. Plaintiffs allege that Jackson Hewitt hides the fees by labeling them as a “Tax Preparation” fee in the final billing statement submitted to customers. The fees include an automatic 15% multiplier fee for income tax returns, additional charges in connection with the purchase of a refund anticipation loan or an accelerated check refund, and additional charges for the preparation of a state long form tax return even if the customer qualifies to file a less expensive state short form tax return.
In a decision dated August 16, 2008, the Court rejected, in substantial part, defendants’ motions to dismiss the case. The Court stated that “[b]y luring customers away from competitors with low advertised prices as well as extracting higher fees and royalties through the hidden charges, defendants stood to derive concrete benefits from the alleged practices.” The Court has not decided the merits of the claims or defenses and the parties have proceeded with discovery in the matter.
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