Judge Denies H & R Block Purchase of TaxAct

by Jon A. Hayes, TaxPreparerConnections.com

Though Good News, Decision Doesn’t Stop Effort to ‘Big Box’ the Market.
The Question is:Are You Prepared?

A federal judge recently upheld a Justice Department injunction preventing H & R Block from purchasing 2SS Holdings, owner of TaxAct. The ruling prevents Block from creating an online tax preparation service able to monopolize this important and growing market.

H & R Block had sought the purchase in hopes it would increase walk-in tax preparation market share. Recent statistics show a significant number of online preparation users don’t complete the process and go to a preparer, and Block was poised to aggressively market its preparers to these consumers as evidenced by major internal shifts like terminating grassroots marketing representatives, eliminating refund anticipation loans, and selling its financial services division.

The company was so sure people would springboard from the online platform that they forged an agreement to add 300 more offices in Walmart stores to help accommodate the projected increase in business.

So now Block must scramble to pull new clients in, and this tax season could well be lean. But the next two years present them with a goldon opportunity to significantly increase market share. As IRS tax preparer regulations impose costly credentialing and CPE requirements, thousands of preparers are projected to exit the industry, leaving millions of clients looking for a replacement.

Block will be poised to pounce, as will other franchises and large preparation firms. And if small firms and sole practitioners aren’t prepared to fight for a piece of that pie, the industry could see a drastic shift similar to when big box stores drove small pharmacies out of business.

Such a shift would erode the quality of tax service since profits would depend on mass production rather than the personal service many clients need to insure they minimize tax liabilities in a very complex tax code. And since current requirements to become a tax preparer require a minimal commitment and EAs and CPAs can sign a return that staff has prepared a substantial portion of (reducing labor costs), taxpayers could soon be standing in lines to have their taxes done”cookie cutter” style.

Sound familiar? What was the pharmacist’s name who filled your last script?

WHAT YOU CAN DO TO FIGHT BACK!

This is EXACTLY why small firms and sole practitioners must diversify their tax-only businesses. They simply will not be able to compete with “big box” firms who can offer cheaper prices to financially-challenged consumers.

Expanding into financial advisory, consulting, tax representation, and/or technology support services is essential to solidify the important client trust that guarantees long term existence.

National accounting and tax associations don’t discuss this. Based on their enthusiasum to help the IRS regulate the “little guy” (or “rogue preparers” as they commonly call them) out of business, it seems they embrace the “big box” shift with a “see no evil” approach.

Tax Preparer Connections won’t do that because we understand the importance and value small preparers bring to the consumer. In coming months, we’ll unveil new service programs that will help you expand and diversify so you can retain and add new clients. We’ll supply marketing templates and tutorials to help you sharpen your sales skills so soliciting new business becomes second nature.

In the meantime, we strongly urge you to:

– Solidify plans to earn either the RTRP or EA after tax season if you’re not currently credentialed. Earning the EA is highly recommended, but if you aren’t ready to make that commitment, earning the RTRP eliminates any possibility of the IRS putting you out of business. We’ll help you no matter which credential you choose to earn with our FastForward Academy homestudy course. All we need is your commitment.

– Spend time in November and December reviewing prior client returns and files with an eye towards those who filed business schedules and invested savings. This is VALUABLE information you can use to ask important questions that pave the way into financial advisory and consulting services.

– Take 5 extra minutes with each of these clients during tax season to ask about their business, level of satisfaction with management of their investments, and any plans they may have to pursue new opportunities.

– Record important details from these meetings, paying particular attention to personal anecdotes (triggers) that can be used in post-tax season reach out efforts.

The BIG difference between you and the near-extinct local pharmacist is your ability to diversify and expand to better serve clients and solidify the trust you’ve toiled to create.

Remember, there is a reason accountants and tax professionals rank first or second in every national polling for the “most trusted professional.” With effective planning and support, you can work an action plan that insures you don’t just survive but THRIVE in this industry.

Stay tuned! There’s plenty more to come.