Tax Season May Be Opportune Time to Market Tax Preparation Services

By Frank Byrt

With less than a month left to go until the April 15 tax deadline, most tax return preparers are up to their elbows in work. Nevertheless, it might be an opportune time to land some new clients, since people are thinking about their taxes and wondering if they might pay less next year if they find a qualified tax preparer now. 
 
Adding fuel to the fire is the fiasco at the nation's largest tax return preparer, H&R Block, where a mistake caused the delay in processing some 600,000 customers' returns. The blunder likely will have many taxpayers wondering if it's time to shop around.  
 
But it remains clear that tax preparers in general have a captive audience. A February survey of just over 1,000 wage earners by the finance and accounting staffing firm Accounting Principals found that about half of middle-income wage earners pay to have their returns prepared by someone else because they to get want the biggest refund possible. 
 
The survey found that: 
  • About 44 percent of working Americans will go to an accountant to prepare their taxes this year, including 49 percent who make between $30,000 and $50,000 annually.
  • Among those who make $100,000 or more, 66 percent say they will get their return professionally prepared.  
 

Ways to Build Your Practice

  • Ask for referrals from everyone you serve. Referrals are a great source for new clients.
  • Use no-cost or low-cost marketing options now available with e-mail and social media.
  • Don't overpromise and fail to deliver. Fulfill any claims you make in your communication and marketing materials regarding pricing and deadlines.
  • Provide basic services for free. This will attract customers who subsequently will sign up for fee-based services, such as state income tax preparation filing.
  • Communicate with clients you've previously served throughout the year to maintain their loyalty at tax time. 
  • Find ways to educate potential clients about your education and your abilities to reduce their taxes. This will differentiate you from those who just enter data into a software program.
  • Offer a range of personalized services. Small players can gain a competitive advantage by developing a relationship with clients in other business or personal financial areas. 
  • Build an experienced workforce. Experienced tax preparers can perform a larger volume of work and generate higher revenue through speed and efficiency.
 

The tax preparation industry is in transition, and it's an especially challenging time for those firms that work for lower-income clients with simpler returns, according to Tax Preparation Services in the US, a study published in August 2012 by the research firm IBISWorld.

 
Doug Kelly, the IBISWorld analyst who prepared the report, told AccountingWEB there are more small-time preparers in the market because of the relative ease of use of such software programs as Intuit's TurboTax. And then the free IRS e-file service is taking away an increasing number of lower-income taxpayers with basic returns.
 
"In response, many tax preparation firms now provide basic services for free. In doing so, they attract customers who subsequently sign up for fee-based services, such as state income tax preparation filing," he said in his report.
 
If tax preparers market themselves properly, there's plenty of opportunity for those who target middle-income and high-income tax clients, industry experts say.
 
Nate Hagerty, founder and CEO of TaxProMarketer, a tax industry marketing and consulting firm, told AccountingWEB that asking existing clients for referrals and contacting lost clients from prior years are the quickest ways to drum up business, even this season.  "A lot of times, they just need to be asked." 
 
The negative publicity surrounding H&R Block's troubles presents "another good reason to remind people of the value you provide," Hagerty said. "But it's a delicate situation. You don't want to bad-mouth the competition." 
 
Hagerty said that communicating with potential new or former clients before tax season, without necessarily making a sale pitch, can also be worthwhile, especially if it's done in a personal way. Just e-mailing tax tips or reminders about deadlines isn't enough to get their attention given the blizzard of e-mails most people receive, he said.
 
Dominique Molina, CPA and president of American Institute of Certified Tax Coaches, a national network of tax planning specialists, says that CPAs and tax professionals need to do more to differentiate themselves from tax preparers who are merely performing data entry.
 
Molina said, "Most consumers don't understand the differences between H&R Block and someone who is a CPA, an EA, or a tax attorney. They're all viewed the same way by some people – as someone paid to prepare forms." Find ways to educate potential clients about your education and your abilities to reduce their taxes, she says.
 
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