The nation’s largest retailer is going to do taxes for millions of people for free this year.
Wal-Mart says there will be tax preparers in 3,000 of its stores. Most of those preparers will be from Jackson Hewitt, although some will be from Block.
The free offer applies only to people that file a 1040 EZ.
This may not be a killer for H&R Block and Jackson Hewitt. Although they compete for similar customers – each tends to do a lot of simple returns for lower-income households – they have already been doing some free returns. H&R Block offered free 1040 EZ returns online last year. In fact, it can be an opportunity for cross-selling. Both preparers have a prepaid card, which generates fees upon the opening of an account and potentially more of the consumer uses the card thereafter as a regular payment tool.
It is also possible that a fair amount of people will walk into the kiosk and then discover that they cannot file a 1040 EZ – in which case they will most likely end up using Hewitt or Block.
It it hurts Liberty, then the timing is bad. Liberty Tax, the nation’s second largest preparer, is in the process of making an initial offering of its shares for sale on NASDAQ.
It is bad news for the ongoing presence of VITA sites. Voluntary Income Tax Assistance sites do taxes for free and have for years. As it does with any category where it sets prices, Wal-Mart will force VITA to rebrand itself. It will not be enough for VITA to promote itself based on cost. They will have to tell people about the quality of their preparation. This could be a reach. Many VITA sites have sporadic hours and preparers with limited training.
The offer includes federal and state return preparation.