Attorney General Files Lawsuit Against South Side Tax Preparation Business

CHICAGO (CBS)-- Nu Republic franchise owner Toure Muhammad said he was stunned by the news, Illinois Attorney General Kwame Raoul filed a lawsuit against his tax preparation business.

The Attorney General alleges customers would pay $350 to get their taxes done at Georgia based Nu Republic or sister company, Refund Republic.

Customers were told this could double their refund or allow them to get free cash advances.

Raoul said what was really happening was a short term loan. Customers were charged high, undisclosed fees and the money was taken from refunds without their knowledge.

The fees could total nearly $1000 which in some cases, could be almost the entire amount of a refund.

"The $350 is a actual preparation, tax preparation fee. So, when you talk about loans, tax preparation fees, don't include loans," Muhammad said.

Muhammad said the Nu Republic location was initially at 644 E. 79th Street last year and moved to 79th Street and Drexel Boulevard this tax season. Both locations are named in the lawsuit.

"We don't have any allegations," Muhammad said. "We don't have any people that have come to us. Any problems saying, 'Hey, you all took some money from us, you all overcharged us.' We're very transparent. We're very open."

In Chicago, Nu Republic has an "F" rating from the Better Business Bureau and has had seven complaints in the last year.

"Problem with their taxes, filing taxes and a combination of different things that were promised to them [customers] that they did not receive and they tried to resolve it through them [Nu Republic] and they couldn't so they decided to file a complaint with us," Steve Bernas of  Better Business Bureau stated.