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Jason Houseworth, H&R BlockH&R Block used an investor's day this week  to come out with all guns blazing at the rest of the tax preparation market, especially Intuit. Executives said that in the next tax season the company would offer free RACs, expand its Emerald Card program by 1 million and challenged Intuit's assumption that digital tax preparation is outstripping assisted preparation.

"Online will slow down over the next two to three tax seasons," said Jason Houseworth, SVP of Block's Digital Tax Solutions division. Block executives said they weren't dismissing the importance of digital preparation. But they pictured Intuit's growth as coming from a rapidly shrinking number of manually returns, not from those whose returns that were prepared with assistance. They insisted that assisted preparation has stayed at the same percentage of filed returns for the last few years. And as to Block's digital products, Houseworth claimed, "We will grow at a faster tax rate than TurboTax in the upcoming tax season and beyond." He also said Block's quality would be at "parity or better with TurboTax."

Outside of the positioning claims, the decision to provide free RACs is probably the most significant challenge to the rest of the market, especially for independent preparers that compete with the chains. The move is especially aimed to pressure those who have been left without refund anticipation loans. Executives noted that Republic Bank is the only bank left providing RALs after Chase quit the market and regulators forced other out and are trying to do the same with Republic. The tax services company also introduced Block Live, which it said would give customers a chance to talk with professional preparers via a Skype-like service. And the expansion of the Emerald Card pre-paid Master Card is going to be dramatic. Block said it had 3.3 million cards in the market during the 2011 tax season and will have 1 million more in the 2012 period.

Executives hammered away at Intuit's view that most of the market will shift to do-it-yourself technology, whether desktop or online. "The folks at Intuit still don't understand the tax business" said CEO William Cobb, after reading a recent quotation from Intuit CEO Brad Smith. "Tax preparation is a stressful process." He noted that Intuit has pointed to how consumers show for goods in services online such as purchasing books. Cobb continued, "It's not as easy as buying a book. Tax preparation is not a commodity product. They [Intuit] want us to believe every consumer is identical in their desire and aptitude to prepare taxes."

And executives rolled out a series of statistics based on a survey of 35,000 end users. Again, they aimed at Intuit. Block claims that the same young adults who use online services and social media extensively are more likely to use assisted preparation rather than go D-I-Y because even though their returns are simple, they are uncertain about their ability to handle returns. Block said its survey showed that 67 percent of filers aged 18 to 34 years old who make less than $50,000 annually get assistance. The survey also found that this group files early - 63 percent file by February 16 and 74 percent by March 1. The combination of those factors shows that it is important for Block to get these filers earlier in their careers and to push its marketing hard early in the tax season. The company continued that the 14 million tax returns filed by Latinos fit the same pattern with 68 percent of those age 18 to 34 getting assistance.

Block also discussed its mobile plans that includes an app that enables 1040 EZ taxpayers to take a picture of a W-2 and have that data imported into the tax return. The app supports the Android and Apple IOS platforms.

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
Last modified on Sunday, 02 June 2013
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