Jackson Hewitt

Jackson Hewitt Tax Service, Inc.
Privately held
Founded Norfolk, Virginia United States (1982 (1982))
Headquarters Jersey City, New Jersey, United States
Key people
  • President and Chief Executive Officer: David Prokupek[1]
 • Senior Vice President Franchise Operations and Sales: Duane R. Mora
Products  • Financial services
 • Tax preparation
 • Refund anticipation loans
 • Franchises
Website jacksonhewitt.com
Jackson Hewitt office, Wayne, Michigan.

Jackson Hewitt Tax Service Inc. is the second-largest tax-preparation service in the United States; responsible for preparing over 2.5 million computerized federal, state, and local individual income-tax returns each year.

The company is based in Jersey City, New Jersey.[2] It operated more than 6,800 franchised and company-owned locations throughout the United States, including nearly 3,000 located in Walmart stores nationwide, and more than 400 Sears stores in the United States and Puerto Rico for the 2014 tax season. [3]

Jackson Hewitt offers free electronic filing, tax-preparation training, and tax audit representation.[4]

In January 1998, the Cendant Corporation, a consumer conglomerate, purchased Jackson Hewitt in a transaction valued at approximately $480 million.[5] In 2004, Jackson Hewitt Tax Service Inc. was spun off as a separate company.[6]

History

Foundation

Jackson Hewitt was founded in 1982. It was assembled by John Hewitt with a variety of investors who purchased the six-location, Norfolk, Virginia-based Mel Jackson's Tax Service and renamed it Jackson Hewitt.[7] For the next few years, the company grew slowly, adding a handful of additional outlets.

Expansion

In 1986, the same year the Internal Revenue Service first began to experiment with computerized tax filing, the company began selling franchises.[8] By the following tax season there were 22 offices.

In October 1989, the Montgomery Ward department-store chain contracted with Jackson Hewitt to open offices in 169 stores across the United States. For years, Sears – a competitor of Montgomery Ward – had been host to H&R Block in its stores. The sudden growth was too much for the company and to avoid entering bankruptcy during tax season, Jackson Hewitt closed 67 of those offices. However, by the end of 1990, the company had returned to profitability and opened more locations in Montgomery Ward stores.

By 1992, Jackson Hewitt had 515 offices in almost 30 states and was preparing 311,000 returns for taxpayers per year, making it second-largest tax preparation chain in the United States. During the following year, the company raised funds for expansion and moved into new headquarters in Virginia Beach, Virginia. By 1993, the company had 900 offices in 37 states.

In January 1994, the company went public but no new stock was issued; the company's 700 investors' private shares simply converted into public ones. During that same year, the company made a deal to set up offices in Sam's Club stores on a trial basis. The trial was a success, and later that year the company launched plans to establish eighteen offices in Walmart stores, leasing space for use as combined tax preparation and business mail service sites.

Cendant

In December 1997, Jackson Hewitt announced that it was being acquired by HFS Inc. for $480 million. Before the sale was complete, HFS merged with another firm and changed its name to Cendant Corporation. Cendant owned a number of franchise operations, ranging from Ramada Inn, Days Inn, and Avis Rent-A-Car to chains including Coldwell Banker and Century 21.

Under Cendant, Jackson Hewitt opened a total of 1,000 new offices, and started experimenting with kiosk locations in shopping malls and offices at Century 21 real estate agencies.

Following the 1999 tax season, Jackson Hewitt moved its headquarters to Cendant's headquarters in Parsippany, New Jersey, and started acquiring of independent tax preparation offices through its largest franchisee, Tax Services of America. Meanwhile, founder John Hewitt's Liberty Tax Service had grown into the third-largest tax preparation chain in the United States

Starting in 2001, Jackson Hewitt began opening offices in Kmart stores. During that year, the company also introduced the issuance of MasterCard cash cards – so that their customers would have easier access to accelerated refund accounts – as well as the creation of a Premier Tax Service for complex returns. Some Jackson Hewitt locations began to offer ATMs where clients could cash their refund checks on-site. Independent tax-service acquisitions continued throughout the year, with more than 3,300 offices, owned by 600 franchisees.[9]

By year's end, the company was handling over 2.2 million tax returns a year.

At its peak, Jackson Hewitt was the second-largest tax preparation firm in the U.S a position it still holds. The firm prepared some 3.4 million tax returns for low- and middle-income customers through more than 7,400 franchised company-owned offices, including locations within Kmart, Walmart Stores and mall kiosks.

Jackson Hewitt maintained two business segments: its franchise operations – consisting of its franchise business and associated royalty, marketing-advertising revenue, financial product fees and other revenues and its company owned income tax return preparation offices. During 2008, Jackson Hewitt maintained company-owned offices in 28 markets across the United States and 5,763 franchised offices – responsible for preparing 87 percent of the total number of tax returns prepared by its network.

Jackson Hewitt Inc. operates as a wholly owned subsidiary of Jackson Hewitt. Its company-owned office operations are conducted through a wholly owned subsidiary of Jackson Hewitt Tax Services Inc., Tax Services of America, Inc.

In 2008, the company partnered with the Magic Johnson Foundation to create Community Empowerment Centers that offered comprehensive tax information seminars and financial educational resources in Sacramento, Houston, Chicago, New Orleans and Cleveland. The free seminars offered individuals in underserved communities basic tax information and budget-planning resources. For example, each attendee received free access to the Jackson Hewitt Money Manager, a Web-based home budgeting tool that helps users create and manage a budget and a detailed savings plan.[10]

Default

In May 2009, the company negotiated out of a default on its debt and technically defaulted for several days in May 2010 (although an agreement with creditors was announced within one week of the "default").[11]

On May 4, 2011, the company announced it had agreed to a twenty-day extension of its debt under its various credit agreements with Wachovia/Wells Fargo Bank. The company mentioned at that time that it was considering many options including a prepackaged bankruptcy filing. On May 20, 2011, the extension expired and the company had yet to file for bankruptcy protection or to announce another extension of its debt.

On May 7, 2011, Jackson Hewitt ceased being traded on the New York Stock Exchange. The ending share price was $.19. On May 9, 2011, its stock symbol was changed from JTX to JHTX and began trading on a different stock exchange. On May 24, 2011, Jackson Hewitt officially filed for bankruptcy.[12]

In August 2011, Jackson Hewitt became a privately held company with Philip Sanford as its president, chief executive officer and a member of the board of directors.

Investigation

On April 3, 2007, the United States Justice Department announced that the federal government had filed civil injunction suits alleging tax fraud by five corporations owned or partly owned by Farrukh Sohail. According to the four lawsuits filed in federal courts in Chicago, Atlanta, Detroit and Raleigh, the corporations operate under franchise agreements with Jackson Hewitt Tax Services Inc.[13]

On September 28, 2007, the Department of Justice announced that it had reached settlements with each of the defendants in the case. Under the settlement agreements, the majority owner, Farrukh Sohail, of each of the businesses was to be barred from preparing tax returns for five years,[14][15] and roughly fifteen of Sohail's employees were permanently enjoined from preparing tax returns. Neither Sohail nor his incorporated businesses were to pay any financial penalties under the settlement agreement, indicating that the fraud committed was not done with the consent of senior management in Sohail's business.

On September 6, 2007, Jackson Hewitt said that its internal review found no evidence its employees knew of the scheme that led to U.S. Department of Justice lawsuits. The internal review, led by former IRS Commissioner Fred Goldberg: "...did not find evidence of corporate employee participation in, or knowledge of, the allegedly fraudulent tax return preparation activities."[14]

Post-2007

Jackson Hewitt is led by David Prokupek, president and chief executive officer, who joined the company in March 2014. The company is privately held by Bayside Financial.

Jackson Hewitt has a strong retail presence and has re-emerged after bankruptcy as the second-largest and fastest growing tax preparation company in America, having been named Vendor of the Year for Walmart. During the 2013 tax season, it expanded its presence into Sears throughout the U.S. and Puerto Rico. on January 7th 2015 Jackson Hewitt unveiled its new brand logo and slogan "Working hard for the hardest working" and the return of refund anticipation loans with 0% interest and no credit check.

Products and services

Tax-return preparation

Jackson Hewitt provides its customers with tax-return preparation services and electronic filing. Through the use of its tax software, ProFiler, the company provides computerized federal income tax preparation, state income tax, and individual tax preparation services to customers through its brick-and-mortar operations. In 2014, Jackson Hewitt and Tax Preparer Solutions partnered to provide online federal and state preparation and e-filing services through the Jackson Hewitt website.[16]

Franchise sales

The company supports more than 5,763 franchise locations throughout the United States. Start-up costs range from around $50,000 to $100,000 per franchise. Jackson Hewitt offers support to franchise owners for approved Jackson Hewitt products, software, and computer hardware. The company offers an online Support Center, as well as staff trained to respond to software and technology needs. The online Support Center also provides remote assistance, email, chat and telephone support. Furthermore, in tax year 2005 Jackson Hewitt unveiled its new ESS scan system which enables paperless uploading of customer documents to its secure server.

Tax School

Jackson Hewitt offers "Tax School" throughout the country with two ways to learn: in a classroom or online, through the University of Phoenix. Jackson Hewitt is an IRS-Approved Continuation Education Provider.

References

  1. ↑ .
  2. ↑ "Jackson Hewitt moves national headquarters to Jersey City". The Jersey Journal. November 13, 2015. Retrieved December 3, 2015.
  3. ↑ [jacksonhewitt.com/Our-Story]
  4. ↑ .
  5. ↑ Gilpin, Kenneth N. (November 20, 1997). "HFS to Buy Tax Preparer, Jackson Hewitt, for $480 Million". The New York Times.
  6. ↑ .
  7. ↑ .
  8. ↑ .
  9. ↑ .
  10. ↑ "Jackson Hewitt Tax Service(R) Supports the Magic Johnson Foundation with Financial". Reuters. February 19, 2009.
  11. ↑ 20.
  12. ↑ "Good riddance, Jackson Hewitt". Crain's New York Business. May 24, 2011.
  13. ↑ Browning, Lynnley (April 4, 2007). "U.S. seeks to shut Jackson Hewitt franchises". The New York Times. Retrieved June 14, 2013.
  14. 1 2 Browning, Lynnley (September 29, 2007). "Jackson Hewitt to Cut Ties With Franchiser". The New York Times. Retrieved June 14, 2013.
  15. ↑ US Department of Justice (September 28, 2007). "Corporations That Owned Jackson Hewitt Franchises in Three States Agree to Be Barred from Tax Return Preparation" (Press release). PRNewswire-USNewswire. Retrieved June 14, 2013.
  16. ↑ .

External links

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