On September 11, 2017, about 1100 central daylight time, a Hiller UH-12A helicopter, N2686, registered to a private individual, sustained substantial damage after a loss of directional control and collision with the ground following a loss of the tail rotor drive in the vicinity of Griffith, Indiana. The certified helicopter flight instructor (CFI) and his student were not injured. Visual meteorological conditions prevailed throughout the area and no flight plane was filed. The local instructional flight was being conducted under the provisions of Federal Code of Regulations Part 91. The fight originated at 1050 from the Griffith-Merriillville Airport (O5C), Griffith, Indiana. The CFI stated that he was providing dual flight instruction to a student pilot. About 10 minutes into the flight, while in a 3-5 foot hover, the student began to lose control and the helicopter began to spin to the right. As the student could not regain control, the CFI took the controls. Upon taking the controls, the helicopter was not responding to cyclic inputs and left pedal input. At this point, the CFI assumed a loss of thrust from the tail rotor. He rolled the throttle off and the helicopter settled to the ground and landed hard. After asking if his student was ok, the CFI exited the helicopter while the main rotor was still spinning. He observed the tail rotor and tail rotor drive shaft were not spinning and could hear a grinding noise near the connection of the transmission output shaft and the tail rotor drive shaft. After the main rotor stopped spinning, the CFI found the tail rotor guard had broken off the helicopter and was laying about 20-feet away. The CFI did not recall if or when the tail rotor guard struck the ground. The helicopter was towed to a hangar and was inspected by a local mechanic and FAA inspector. During the inspection, it was discovered that the tail rotor driveshaft had failed near the output shaft of the tail rotor drive assembly. Substantial damage was incurred to the tail rotor and tail boom. Maintenance records were not available.