Crush eases for preparers Taxes: Deadline business is steady, but H&R Block and Hewitt find fewer procrastinators lining up at their offices.

April 16, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

You might think the lines stretched out the door and around the block at the H&R Block and Jackson Hewitt storefronts yesterday.

But most people are not procrastinators -- at least not that much. So, for the nation's two tax preparer chains, the bulk of their business was already done in January, February and March. Even self-preparers generally filled out their forms and filed or waited to write the check just before last night's tax filing deadline, according to state and federal tax officials.

At an H&R Block office on Light Street near the Cross Street Market yesterday, business was steady, but there was hardly a crunch. "A lot of people think they owe money so they wait until the last minute, then they are surprised and get money back," said Donna Perry, a manager at the office.

That is not to say that those offices didn't do a brisk business yesterday. At a Jackson Hewitt office in Catonsville, Tom Walter, the general manager, said 10 percent of the office's business is done in the last week before the filing deadline.

"Last-minute filers have more complicated returns and generally they do owe," he said.

"Generally, most people file right after they get their W-2 forms," said Daniel Murphy, assistant director of communications at Jackson Hewitt, based in Virginia Beach, Va.

And it is a good thing. Both chains have turned the fact to advantage. Many Americans use their tax refund as a savings plan, and they want that money as fast as they can get it for a trip or some big purchase. So the two chains offer a service, in collaboration with banks, that lends money to those who will get refunds. Called "refund anticipatory loans," the program is expected to generate about $15 million to $20 million in pretax earnings for H&R Block this year, said Paul A. Mackey, an analyst with Dean Witter Reynolds.

H&R Block, which prepares about 14 million tax returns each year, has done other things to improve its bottom line in the past several years, Mackey said. "They are mining their franchises." The company now offers home equity loans and has opened a more upscale version of its storefronts in private offices that offer tax return services to those with more complicated filings.

Jackson Hewitt, which came into many markets with higher prices than H&R Block, has allowed Block to increase the prices it charges. What Block realized is that a few dollars more mean very little to people anxious about their taxes, Mackey said. So Block raised prices 8 percent in 1996 and 10 percent this year, he said.

In addition, the company has increased the volume of returns it does by 3 percent to 4 percent a year. That is a considerable increase, given that the company already does the tax returns of about 6 percent to 7 percent of all Americans who file. And consider that 50 percent of Americans prepare their own taxes.

Jackson Hewitt is growing quickly as well, adding 20 percent more offices a year to its 1,300 offices in 42 states. The company has grown in part by putting its stores in Montgomery Ward and Wal-Mart stores from January through April. While those offices tend not to be the busy ones on April 15, they do a lot of business earlier in the tax season.

Jackson Hewitt has a tiny percentage of the market -- 800,000 returns last year compared with Block's 14 million, Mackey said. But there is no other chain challenging Block.

Six or seven years ago, before electronic filing, April 15 was far more hectic, said Perry at the H&R Block on Light Street. "We wouldn't get out until 1 or 2 in the morning," she said. But electronic filing speeds up the process because she can type information into the computer and no longer needs to do the calculations.

She planned to hold a party last night for the people who work in the office, and thought it possible that it might begin before midnight.

Pub Date: 4/16/97

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