Free Tax Prep at Wal-Mart
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.
karl
January 11, 2012
How does a commercial operation where only one type of simple federal return is prepared for free force a volunteer operation where ALL returns are prepared for free (and no cross selling goes on) to rebrand itself? True, the office hours don’t compare, but what do you expect from a service that is not designed to make a profit and operates solely with volunteer staff? Isn’t that kind of like complaining that a Church is only open on Sunday?
I think you will continue to see long lines waiting at the VITA sites. Many people realize that most of them will not qualify for the free 1040EZ return. Only 11% of the returns filed in 2009 were 1040EZ. That market is very small. The offer serves as a bait and switch for most clients, since they don’t fit in that category. I think most clients would be very interested in (totally) free tax return preparation without sales gimmicks and up sell techniques, even with the limited hours.
I would have to agree that quality preparation is a problem, but that applies to the commercial preparers as well. There is a good reason that H&R Block offers a “second look” service to check an old tax return (but then charges to fix the problem) and even offers, (for a fee) a policy to clients to cover mistakes made by their employees in preparing tax returns…That is because a large percentage of tax returns (no matter where they are prepared) have errors in them. It will be interesting to see how much the new IRS education and testing requirements for tax preparers (some of which VITA already utilizes) cleans up any of the industry “quality” problems. I am betting that the impact is not very great.
sdoggie
January 11, 2012
I agree with most of what you are saying, and there are some additional comments in your reply that are also true. I do think that the quality of preparation can be a negative at the national preparers, as well. Certainly the new IRS requirements for training will help. I think the big preparers are going to be out in front of the smaller preparers on getting those trainings into the standard ops.
I think that a number of people are going to see the kiosks in Wal-Mart with the free return signage, and that a substantial portion of those people will not qualify for the free prep because they won\’t get a 1040EZ. However, many will just go ahead and pay the cost for regular prep because they are already there. Yes, it could be a \”bait and switch.\” That\’s why they are willing to go along with the Wal-Mart idea.
VITA does not have to be voluntary. We run a VITA site staffed with people on Work First. They get a wage and training. The site is open for at least 40 hours a week during the heavy season. There are staffed phone receptionists taking appointments, as well as an online reservation form. VITA does not have to be the way it is. VITA sites can change with the times. Today, a lot of people like to do things online. Yesterday I made a reservation at GreatClips online.
karl
January 11, 2012
I wasn’t aware that there were non-volunteer VITA sites. I am not familiar with work first.
sdoggie, who pays the wages of the tax preparers?
Does this Vita operation still offer free tax preparation for clients?
How does this work?
sdoggie
January 12, 2012
Yes, the tax prep is free and the center complies with all of the rules set by the IRS for VITA. The preparers all pass the training and they only prepare the appropriate return types.
The wages are paid by our non-profit from grant funding. The employees are all unemployed. They come from WorkFirst, which is a program of the North Carolina Employment Security Commission. They benefit from training for tax prep skills, but there is also a general component that focuses on professionalism in the workplace.
VitaCPA
January 20, 2012
As someone who has served as a VITA site supervisor for nearly 20 years, I can attest that we work very hard while providing free service to our clients, most of whom return to us year after year. Yes, we have limited hours and operate by appointment; this is because we are a college/university site. I have well-trained student volunteers who “turn-over” every year because they graduate and move on. The only time we turn a client away is if the return is too complicated under the VITA program guidelines or earns too much. We ask our clients many questions to try to get them all the deductions and credits they’re entitled to and well over half of our returns have the EITC on them. Many of my volunteers go on to public practice but have received their first experience with VITA. Our students win because they get hands’ on experience while I’m there to help. Our clients win because they receive free, quality service from trained and certified volunteers. Tough to beat that.
Taxpete
February 18, 2012
No I might be a little biased because I do taxes professionally, but having my taxes prepared by somebody was unemployed a month ago?
Great to see somebody is employed, but don’t complain to me!!
adam r
February 22, 2012
Well, it is absolutely true that the preparers were unemployed. I would hesitate to say that this should color how we frame up our expectations for their skills. One of the ladies was formerly in IT at Verizon. She got laid off. It happens.
If you do want to work at a VITA site, the IRS insists that you complete and pass a test. Moreover, VITA sites are not serving people with complicated returns. Most of these returns require a w-2 or a 1099. Not many are itemizing. You cannot use a VITA site if you own a business.
Thomas Strome
October 24, 2012
Having a fair amount of tax for all business establishment won’t change the economic crisis for our country. Looking for a enrolled agent classes?
sdoggie
October 25, 2012
I don\’t really understand your point. Can you explain further?