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Liberty and TaxAct Show Filing Gains

 John Hewitt, Liberty TaxLiberty Tax and TaxAct grew the number of returns they received or processed faster than the rate over overall return growth. The two joined Intuit in that category as only H&R Block this year grew at a slower rate than the number of returns efiled with the Internal Revenue Service through April 18.

Block attributed its decline in the number of returns prepared to its decision not to continue the free 1040EZ filing offer that it used in 2013. The IRS said the number of efiled returns through April 18 was 2.5 percent higher than the period through April 19, 2013 while the total number of returns processed grew by 4 percent.

Liberty said last week its offices prepared 1.82 million returns in the recently ended season through April 18, an increase of 4.5 percent over the 2013 tax season. It also was in line with the boom in Internet-based filing as it processed 191,000 online returns, up 36.5 percent over the prior year. After adjusting for a 5.6-percent drop in returns prepared through the FreeFile Alliance, Liberty processed slightly more than 2 million returns, a 26.5-percent rise.

Liberty CEO John Hewitt said in a prepared statement that the increase despite the fact his company was unable to sell franchises during the second quarter of fiscal 2014 while it complete a restatement of some of its financials. He said he expects a "normal, upcoming sales season" for new franchise and anticipates the Affordable Care Act will provide additional opportunities.

TaxAct, owned by Blucora, had 5.5 million returns for the first quarter ended March 31, an increase of 5 percent over last year's corresponding period. There were 1.3 million returns efiled by professionals using TaxAct, a 10-percent increase.

Despite the growth, the company lost share because of what CEO William Ruckelshaus termed a highly competitive do-it-yourself market with a great deal of price competition. In its first-quarter earnings webcast, Ruckelshaus said the company expects that first-half revenue for TaxAct will be up 12 percent. He said TaxAct historically has not competed aggressively on price and the revenue gains included selling more services to customers.

Operating income for the tax preparation segment reached $37.4 million in the most recently ended quarter, up 21.5 percent over $30.8 million a year ago. Revenue was $72.3 million, an increase of 11.7 percent, from $64.7 million. Ruckelshaus said the company expects first-half revenue will reach $97.5 million to $98.3 million for the half ending June 30.

The company had net income of just under $26 million, a 10.1-percent rise from $23.6 million, while revenue was $216.2 million, up 30.7 percent, from $165.3 million. The large increase in revenue reflects the company's purchase of Monoprice.

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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