Block Reports Higher Return Volume
H&R Block issued an early summary of its tax season on Thursday. The report shows that Block is doing better than last year, particularly with its digital returns.
In all, returns are up more than 2 percent.
These are interesting numbers. Since they only go through February 15th, the customer population is much more likely to consist of clients that are getting refunds. People do their taxes early when they expect a refund. They wait when the believe that they will be paying. There are many reasons why a filer can have a refund. They could have refundable tax credits, perhaps due to green energy incentives. They could have withheld too much.
All of these people were candidates for a refund anticipation loan. What is so interesting is that Block didn’t have RALs this year. Jackson Hewitt and Liberty did, and while they haven’t given an update on their early season results, it stands to reason that Block has poached some of their business.
It underscores the fact that there is a place for basic tax preparation, sans the high-cost consumer loans.
surreal2u
February 26, 2011
Your last comment is interesting considering H&R Block was advertising the RAL product at least initially until otherwise advised to add the note of it pending resolution with their RAL provider. This did drive business to them at least initially as it got the taxpayer in front of them. Marketing also plays as a key component to their success. Both their "Fast Cash" (RAC) of up to $9999.99 and their free 1040EZ filing with only a sir charge if EIC or a state were present were misleading. The fees associated with these offerings often met or exceeded the RAL product fees with preparation yet the taxpayer was getting their refund in 7-14 business days. It just goes to show that taxpayers do not read between the lines and often fall prey to savvy marketing. So, RALs are gone (or dying) but the taxpayer is paying the same amount to get their money in 7-10 days. Why has the focus never been on the preparer fees for preparing and filing the return? Really, when isolating the loan product and the cost associated with it from the bank it's easy to see where the taxpayer was gouged by the preparer.
surreal2u
February 26, 2011
H&R Block is no different as independent preparers are quick to point out how much more the taxpayer can and will pay if going to H&R Block. So, if the taxpayer is paying just as much as when they got the RAL than when they are no longer receiving it then where is the win for the taxpayer? There needs to be more of an emphasis on the fees associated with preparation of the return and the disparity that exists.
TaxWise1953
February 27, 2011
Block purchased independent tax offices over the summer. Are their existing stores up for number of returns? I believe the numbers may reflect buying tax offices.
BankTalk
February 28, 2011
Your question is a good one, because the HRBlock report was silent on that metric. Same store sales year over year is pretty standard. There were some hints to it: a) digital returns were up, digital returns were up a lot compared to digital returns in ty2010 up to Feb. 15th, retail returns were flat, and fees were down 7.6 percent. . All of that would suggest, to me (and we'll have to guess since Block didn't answer the question) that they lost high dollar returns but added simple online/digital business. I don't think this increases the value of their tax office franchises.