Block call part of new age
When someone wins, someone loses. That’s not only true in the world of sports.
There are myriad examples in people’s daily lives; there are myriad examples in the business world, one of which no doubt captured many taxpayers’ attention last week.
H&R Block, Inc., whose name is at the forefront at income tax time almost as much as the Internal Revenue Service’s, announced that it plans to close approximately 400 of its U.S. offices.
As a result of the new federal tax law, many taxpayers will be winning by being able to file their annual federal return without the help of a paid preparer like Block.
Block — and other paid preparers — will lose by presumably having less incoming revenue sources and by having to incur costs related to adjusting services that they provide to taxpayers, going forward.
Besides how the new law purportedly will make filing federal tax returns generally simpler, digital filing options not requiring outside help will continue to lure an increasing number of people.
That will be true in regard to state and local tax returns, too.
For years, the digital file-your-taxes-from-home option has been eating at the customer volume of companies like Block, and that is destined to become a more formidable challenge for those companies with each passing year as computer-savvy young people continue entering the workforce while remaining members of the pencil-and-pen generations pass away.
Granted, there will continue to be people with more complicated tax filings who will opt for the paid services, or seek help from accountants, but the purported simplification of the tax process will enable more people to prepare their own federal filings.
Meanwhile, many taxpayers will use the tax-filing skills acquired from their easier federal exercise as a basis for sharpening their skills for their usually less-complicated state and local income tax filings.
Still, there always will be taxpayers with less complicated filings who, fearful of making an error or who don’t want to spend hours on tax preparation, will continue considering Block and other companies a convenience not to be replaced.
Many taxpayers who prepare their tax filings without outside help often clarify questions by way of a trip to an IRS office, such as the one in Altoona. Also, many taxpayers find quick answers to their questions by accessing the IRS website.
Thus, Block and other tax preparers seemed destined to suffer continuing losses amid the new, high-tech tax landscape.
According to an article in the June 14 Wall Street Journal, Block anticipates revenue for fiscal 2019 to be between $3.05 billion and $3.1 billion, a drop of as much as 3.5 percent from the year that ended on April 30. Stock shares in Block closed at $24.29 on June 13 — off 18 percent — in one of the largest single-day percentage declines in the company’s history.
The proposed office closings represent 4 percent of Block’s nearly 10,000 company-owned and franchise locations in this country.
Block probably is right in envisioning its long-term-future role as a cross-channel player where users can move easily between filing returns online or getting in-person assistance.
That will be testimony that those who suffer losses don’t have to continue losing.