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Trend Continues: D-I-Y Tax Returns Rise

IRSThe number of returns efiled by tax professionals has dropped while the number of self-prepared returns continued to rise. Those are the results shown by statistics released this week by the Internal Revenue Service. The numbers cover the filing season through February 27 this year, compared to the period ended February 28 last year.

Those results are supported by the drop in returns processed by H&R Block and Liberty Tax Services, while TurboTax filings were up for the most recent periods those consumers have reported return volume.

The total number of returns received by the IRS dropped by six tenths of a percent to 58.5 million, while the number processed, 56.9 million, was down 1 percent over last year's corresponding period. The number of efiled returns prepared by tax professionals fell to 28.7 million, off by 4.4 percent, while there were 26.4 million self-prepared returns filed, an increase of 6 percent.

Those trends have been discussed by Intuit CEO Brad Smith in last month's earnings webcast for the quarter ended January 31. Smith said the D-I-Y share of the market would continue to rise while the number of returns prepared by tax returns would fall.

Last month, Liberty CEO John Hewitt said his company had seen one tenth of a percent fewer customers for the period through February 13, although Liberty's revenue was up. This week, Block said the number of returns it prepared fell by 4.2 percent through February 28.

During this week's webcast for Block's third quarter ended January 31, CEO Bill Cobb pounded his theme that the growth D-I-Y returns has been fueled by fraudsters seeking Earned Income Tax Credits. Taxpayers going through paid preparers have to answer 27 questions while the D-I-Y customers are not screen at all.

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