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Effect of high employment/economy on tax prep chain business?

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    Effect of high employment/economy on tax prep chain business?

    I recall about 12-13 years ago, H&R Block started opening new offices and recruiting seasonal tax pros like crazy. The economy was ramping up then, prior to 2008 melt-down, when offices started getting closed instead and new hires went down.

    Does anyone know if the same thing is happening now? New offices being opened by the chains? Recruiting new seasonal workers, especially part-time retirees? Or has self-prepared kept the office-prepared growth down this time around?

    I realize if you are a current employee you probably can't disclose anything under your real name, so I hope you have a good user name on this forum.

    #2
    This is purely anecdotal, but it's my impression that there are less chain offices than there used to be. At one time, I could count at least 8-10 Jackson Hewitt (are they still in business?), Liberty, and HRB offices in strip malls within a 5 mile radius of my office. Plus a couple of offices for a local chain. But I think all of them are closed now, even though all those strip malls are still going strong. This past tax season I realized I can't tell someone where to find a chain office if they ask me to prepare a return with EIC. I don't even recall seeing anyone with a Lady Liberty or Uncle Sam costume on the side of the road this year.
    Last edited by JohnH; 06-05-2018, 07:50 PM.
    "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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      #3
      I agree with JohnH's general observation that a lot of chain stores are closing unprofitable/low volume locations. I believe there are two reasons for this in my opinion:

      1) A lot of tech savvy folks are doing their taxes online and this trend will continue to increase with the tax reforms from this year.

      2) A lot of local mom/pop tax preparation services have popped up over the years, that offer prices much lower than the chain tax prep stores. Just look at the Craigslist and Yelp/Google listings during tax season. Just in my general area it has almost doubled. We even have some preparers offering home preparation for the elderly and home bound folks.
      Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

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        #4
        Short on preparers

        I think there will be and has been a shortage of preparers. I think they have announced 3% unemployment is really considered full employment.

        It will never be easy enough to prepare returns completely on your own, as long as the credits exist.

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          #5
          2018 will be tax simplification

          2018 will be tax simplification for most people. Elimination of deductions, combined with whopping standard deductions, will dry up opportunities to reduce taxes accordingly, credits notwithstanding. Credits are, by their nature, simpler and involve very little calculation aside from phase-outs.

          This affects the original question, as fewer and fewer people will need tax preparers. This is to the delight of the IRS, who salivate at the thought of simplistic returns. There are three chain-store type companies that we all recognize - HRB, Jackson-Hewitt, and Liberty. I believe they will suffer loss of prepared returns but could cash in on the rapid refund business, where their resources and expertise exceeds that of preparers engaged in pure taxation.

          TurboTax will be taking more and more clients. Not because their software is better than ours, but because of their advertising appeal. Rather than focusing upon themselves, they focus on an ever-increasing I.T.-savvy population, by telling them how wonderful and modern their life will be if they buy software that make them super-smart. The appeal to such customers as computer geeks and engineers is undeniable.

          The readers of this post and I know the truth. TurboTax calculates wonderfully, and they have an extensive questionnaire which takes days to visit if the approach is thorough. But the user is woefully deficient in dealing with his own perception of taxes and leaves money on the table. The user, however, believes the software has made him omniscient and never knows how much he has lost. Most of the TurboTax returns I have followed have cost the clients big money in lost opportunities to reduce their taxes.

          I believe this is the real culprit behind loss of business for the chains and for us independent preparers as well. The original post wonders if the strong economy is the culprit. I don't see evidence of it, so much as I perceive the TurboTax factor. I have also, for several years, known that the robust employment numbers are fraught with misconceptions, as those having full-time jobs and making livable wages are scarcely better than pre-recession numbers.

          Business taxes are NOT simplified under the new law, and seemingly never are. Our best chance of winning new clients and maintaining what we have are with business customers.
          Last edited by Snaggletooth; 06-11-2018, 02:43 AM.

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            #6
            >>> Business taxes are NOT simplified under the new law, and seemingly never are. Our best chance of winning new clients and maintaining what we have are with business customers.

            You are correct! I see growth potential with business tax returns rather than your run of the mill 1040 with Std. deduction. Until EIC rules and other refundable credits based on family size are changed there will always be a demand for those refund loan type returns and the chain stores will focus on them.
            Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

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              #7
              I doubt "simplification" will have any noticeable effect on clients leaving my services.

              Preparors that feel it will cause clients to leave may want to take a look at how clients perceive the value of the services they receive.

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                #8
                But, then there's the state tax returns

                Our state is NOT going to adopt the new federal rules, they would lose too much revenue. So we now have two separate tax systems, that diverge in what is taxable, deductions, etc. and yet they will still have information that must be linked to the other. Many clients will take standard deduction on federal, but itemize on the state so the confusion factor is going to be large. I expect more work from this new tax simplification law.
                "A man that holds a cat by the tail learns something he can learn no other way." - Mark Twain

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                  #9
                  Further tax prep changes

                  As an addition to this thread, it is worth noting that today H&R Block announced that it is closing 400 locations "as the tax-services provider responds to the effects of a simplified tax code and a shift in customer behavior toward digital tools."

                  The share price of HRB stock fell nearly 18% in response, its worst single-day decline in 30 years.

                  "The times, they are a'changing!!"

                  FE
                  Last edited by FEDUKE404; 06-13-2018, 07:32 PM.

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                    #10
                    Originally posted by FEDUKE404 View Post
                    As an addition to this thread, it is worth noting that today H&R Block announced that it is closing 400 locations
                    Wow! Richard Bloch died a while back at age 78; Henry Bloch is age 95.

                    Where are all the new tax preparers going to come from?

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                      #11
                      Originally posted by Rapid Robert View Post
                      Wow! Richard Bloch died a while back at age 78; Henry Bloch is age 95.

                      Where are all the new tax preparers going to come from?
                      Same place where they came from all these years but at a lower number because demand may be low. But again we can't trust Congress. The tax laws may get more complicated in future years, particularly after 2025. So only time will tell.
                      Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

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