Oakland-Based Tax Preparer Allegedly Bilked Low-Income Customers Out Of Their Earned Income Credit Money
OAKLAND (CBS SF) -- San Francisco City Attorney Dennis Herrera has filed suit against an Oakland-based franchisee of Instant Tax Service for a host of alleged illegal business practices that defrauded low-income taxpayers throughout California.
In a 16-page civil complaint filed in San Francisco Superior Court Wednesday, Herrera alleges that one-time Instant Tax franchisee Kebron Daniel engaged in tax preparation and loan-making schemes that routinely skimmed profligate fees from refunds owed to unsuspecting taxpayers—pocketing fees of as much as $1,500 for loans as small as $50.
Daniel has largely run his seasonal Instant Tax business out of check-cashing outlets in low-income neighborhoods across the state, including locations in San Francisco, Los Angeles, San Diego, Antioch, Carmichael, Compton, Hayward, Inglewood and Martinez.
The tax preparation and loan-making scheme appears to target working families eligible for the Earned Income Tax Credit, a refundable credit under federal law that aims to boost low-wage workers out of poverty. Often lured by the promise of quick refunds or small "refund anticipation loans," taxpayers hired Daniel's company to complete and file their tax returns electronically.
The suit alleges Daniel's company would usually withhold large, undisclosed portions of the eventual refunds before providing a significantly diminished balance—if anything—to customers.
If Herrera's lawsuit is successful, it would secure a sweeping court order requiring that Daniel and his corporate alter ego, LILAY, Inc., fully restore all funds defrauded from his customers; pay $2,500 in civil penalties for each unlawful act; pay the costs of Herrera's lawsuit; and be permanently enjoined from engaging in further unlawful acts.
