Tax Preparation Companies Report Mixed Results So Far

The three largest tax preparation companies, H&R Block Inc., Jackson Hewitt Tax Services, and Liberty Tax Service, reported preliminary results last week for the period from January 1 through February 28th, with Block reporting a decline in number of returns prepared, and Jackson Hewitt and Liberty reporting increases. The Internal Revenue Service (IRS) also released selected preliminary statistics last week, a sharp increase in returns filed from home computers, up almost 17 percent.


Advertisement


Thousands of executives with financial reporting responsibilities use the Comperio on-line library to access the type of information and interpretive guidance PricewaterhouseCoopers' own professional audit staff use around the world. Key content areas include guidance from the FASB, EITF, PCAOB, SEC, and others as well as PwC's interpretive guidance. Get more information and sign up for a complimentary 30-day trial.


H&R Block reported a total of 12.1 million returns prepared, representing a decline of .9 percent, 108,000, from the same period last year. The average fee per client, $153.20, rose 6.2 percent over last year.

“After a disappointing January, we are meeting our expectations, with February results comparable to those in the prior year in our retail offices and digital tax solutions posting strong double-digit gains,” said Mark A. Ernst, Block’s chairman and chief executive officer. “Though do-it-yourself taxpayers are turning to digital solutions, principally online, we don’t see this as a shift from traditional paid professionals.”

Jackson Hewitt Tax Service, the second largest tax preparation company in the U.S. with 6,000 franchised and company-owned offices, reported that it had prepared 2.7 million returns, an increase of 11 percent over this period last year. The company estimates an increase in revenue per return in the 7 – 10 percent range. Most Jackson Hewitt offices are independently owned and operated.

Liberty Tax Service reported an increase of 22 percent in the number of returns prepared and said it had experienced a 6 percent increase in price per return, so far. An overall decline in the level of discounting this year, combined with the fee increase, should result in a 19 percent increase in average net fee per return, the company said. Liberty’s founder and chief executive, John Hewitt, a veteran of 12 years with H&R Block and a founder of Jackson Hewitt, credited brand recognition and employee dedication for the success of the seven-year-old company. Liberty now boasts 2,000 U.S. and Canadian offices.

Despite the increase in returns filed from home computers, IRS Free File numbers are down from last year, indicating that taxpayers are finding other ways to access tax preparation software. Bert Dumars, Director of Electronic Tax Administration for the IRS, said that the Free File option is “an important e-file option that taxpayers should consider as the April filing deadline approaches.”

As of March 10, 2006, the IRS reported that it had paid a total of $101 billion in refunds, with the average refund, $2,728, compared to $2,633 for 2005.

You may like these other stories...

School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...
Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.