Every year, tens of millions of Americans walk into franchise tax preparation offices. The Big 3 – H&R Block, Jackson Hewitt, and Liberty, all have similar business models and offer similar levels of service at similar prices.
Here’s what you may not know: Nearly every single one of these tax franchise offices charges fees that are similar to, and sometimes higher than, what you’d pay to hire a CPA.
Let me explain why this matters, and why you should care.
Every fall, the Big 3 start advertising for their annual tax preparation training programs. For a small fee – usually a couple hundred dollars – any of the Big 3 franchise operations will teach anybody how to be a tax preparer in a matter of just a few weeks.
The top students in these classes will generally be the people that are offered seasonal jobs for the upcoming tax return filing season. Most of these seasonal tax preparers are good, hard working folks. They do tax returns to help make ends meet, feed their families, pay off those Christmas credit card bills, etc. I’m in no way attempting to disparage these people and their motivations. However, there’s also an obvious problem here. The US tax code, if printed, would take up over 15,000 regular size sheets of paper, single-spaced. That’s a lot of tax law.
In any given year, Congress will pass hundreds of pages of additional laws that directly alter the existing tax code or create new tax code. Beyond the tax code, the IRS has also issued over one million pages of interpretation, policy, procedure, and guidance. Staying current with this mountain of regulations is a challenge for any full time, year round tax professional.
In an average year, I invest over 40 hours to keep up on all these changes. Compare this to the part-time, seasonal tax preparer at one of the Big 3 franchises. While there are a few that are genuine tax professionals, the vast majority of individuals preparing tax returns at these offices across the country simply don’t have the same level of experience, nor do they stay up to date on tax law changes, in comparison to a full time tax professional, such as myself. In reality, the majority of these tax preparers have, at best, a rudimentary understanding of the information contained in the 1040 instructions.
In fact, the majority of the tax preparation training programs are based entirely upon the contents of IRS Publication 17, which is just the expanded, more detailed version of the 1040 instructions. When you visit your local H&R Block or Jackson Hewitt office, there is a very high likelihood that your tax return is being prepared by somebody that doesn’t have much more knowledge about the tax return process than you do, despite the limited training they receive in their “crash course”. For the most part, these individuals are trained on how to recognize certain tax forms that most people bring in, how to use the software, and some basics about filing status, dependents, and a few of the most common deductions and tax credits.
If you are looking to just put the right numbers in the right box, then I would actually argue that, for most people, they might as well just use TurboTax and do it themselves, since the software being used by the person preparing your return is, for all and intents and purposes, just using a TurboTax-style program and answering the questions as they go. The problem gets even worse, unfortunately. At any professional tax office, such as a CPA firm, your tax return will be reviewed for accuracy by an individual other than the person that actually prepared your return.
This review process helps ensure that your tax return is not only accurate, but that you’ve received every tax benefit that you’re legally entitled to. This is why your tax return will take a few days to actually complete at these firms. At the Big 3 franchises, when you have your return prepared and completed right there on the spot, there is no review of your return for accuracy and completeness. For many simple returns, such as a single person with one job and no investments or other complex matters, this is rarely ever an issue.
But once you have dependents, investments, itemized deductions, tax credits, rental property or are self-employed, and the like, then your tax return really needs to have this two-step professional review process.
If your 2015 tax return was prepared at one of these outlets, and you have any of the more complex tax situations described above, then call us to schedule an appointment for a complimentary tax return review.
We’ll give your return the professional review it didn’t get the first time around, from a full time, year-round tax professional. We’ll advise you on potential tax saving opportunities, and will discuss your amended return options with you should the need arise.
If you haven’t filed your 2015 return yet, you should also give us a call. While there are still a couple of months to go before the end of the extension period, we’d encourage you to avoid the last minute rush and come see us today.
Call our offices today at (855) 479-2400 to schedule your appointment, and come see how we make taxes less taxing. We offer accounting services throughout New England. Taxes are enforced extractions and not voluntary contributions.
You’re going to wish you called us sooner!