Feb. 01--A Chicago tax preparation service that allegedly misled customers and charged them an estimated $200,000 in illegal fees was sued Monday by the Illinois attorney general.
The suit, filed in Cook County Circuit Court, seeks a temporary restraining order shutting down Individual Income Tax Service, which primarily serves low-income customers in Chicago's Uptown neighborhood and on the South and West sides, according to a statement from the attorney general's office.
"We are asking the court to immediately shut down this company while the lawsuit proceeds so that no additional consumers are charged illegal fees to file their tax returns," Attorney General Lisa Madigan said in a statement.
The attorney general's lawsuit accuses Individual Income Tax Service of charging illegal fees and falsely telling customers they could only pay for tax preparation fees using a refund anticipation check, meaning customers' bills for tax preparation services were taken out of their tax refunds, according to the statement.
Tax preparers tout refund anticipation checks as a way to get instant tax refunds, but the checks -- which don't actually speed up tax refunds -- are short-term loans that often come with high interest rates and fees, according to attorney general's office.
According to the lawsuit, tax preparers offer the refund anticipation checks to customers who are eligible for tax refunds but can't afford the upfront cost of tax preparation services. The attorney general's lawsuit alleges refund anticipation checks make it easier for "unscrupulous" preparers to charge exorbitant fees because customers don't pay upfront, and the charges are taken out of customers' refunds before they receive their checks.
The company, operated by Dawit Gebre, Meles Tesfamarime, Frewoini Gebre and Dwayne Brown, all of whom were also named in the lawsuit, has locations in Chicago's Uptown, South Chicago, East Garfield Park and West Englewood neighborhoods, according to the statement.
A representative of the company could not immediately be reached for comment.
lzumbach@tribpub.com
