As the I.R.S. is now accepting federal income tax returns, a war is intensifying. The war is between the major tax preparing companies. Intuit’s TurboTax, with its online and desktop software, and H&R Block, with its storefronts and online software, are the major opponents, and the battlefield is media, and the warriors are their advertising campaigns.
A few weeks ago, TurboTax released its latest set of commercials designed to criticize unnamed income tax return storefronts, easily assumed to include H&R Block and Jackson Hewitt, that look for preparers by advertising positions “with no tax experience necessary.” The implied message is that when you sit down to provide your income information in a meeting at one of these storefronts, the person helping you might not be a tax professional with extensive experience.
It’s no surprise. Tax season is short, and these stores require employees for only a few months. These are not full-time jobs, so there is certainly the possibility of finding your tax preparer with another job — say, your plumber or shop girl. After all, you don’t need specialized knowledge to handle most income tax situations. I was able to handle the submission of my federal income taxes for many years, even before I started learning about personal finance. In fact, I did my taxes by hand and by mail for many years before the IRS accepted online filings.
For this reason, the latest TurboTax television commercials have some truth. Here’s one.
H&R Block fired back with commercials following the format of employee testimonial, a way to show that some of H&R Block’s storefront employees do have extensive financial experience. The company launched a social media campaign, #IAMHRBLOCK, encouraging their employees to share photographs of themselves with signs describing their tax-related experience outside of filing tax returns for H&R Block.
Here’s a typical shared photograph from the #IAMHRBLOCK social media campaign, from tax preparer Cassi Schmigotzki.
H&R Block’s television commercial above makes a point that the company’s employees sign tax returns, which is of course required by anyone who prepares a federal tax return, unlike with TurboTax online, where you are the preparer. But that signature means nothing — the taxpayer is ultimately responsible for the contents of the tax return, not the preparer.
If you want in-person help preparing your tax return, having bought into the belief that it’s difficult to complete a federal tax return online and get the biggest refund, you need to look for the designation of Enrolled Agent or Certified Public Accountant (CPA), not just the title “tax professional.” That’s not to say that storefront tax preparers aren’t trained. There is an extensive training process, accessible to anyone with or without prior experience. But the training doesn’t leave you with the state or federal certification that you should insist on if you’re seeking professional help with your taxes.
With the Enrolled Agent and CPA designations, your tax preparer can represent you in front of the I.R.S. in the event of an audit, though if you have legal questions about the audit, you’d need an attorney, as well. H&R Block will represent you with an Enrolled Agent — and it may not be the same individual who completed your return and, in theory, is familiar with your situation — for an additional fee. The company does offer a guarantee that if they make mistake, H&R Block will cover the penalties and interest, and that’s a nice guarantee to have, though the I.R.S. normally waives the penalties and interest for first mistakes anyway.
You’ll still owe the extra money if the mistake resulted in a smaller payment due to the I.R.S. than it should have been. Pay another additional fee in advance, and H&R Block would even cover your underpayment — the fee in this case is a kind of insurance.
While H&R Block’s storefront employees can get their jobs without prior tax experience, some customers may feel better about meeting with someone in person. The training is comprehensive, but here’s the bottom line for those viewing the battling commercials and unsure of what to do:
- If your tax situation is simple — you have only basic income forms and you are not an owner of a corporation — you can probably do just as well completing and filing your form online as any H&R Block storefront tax professional, and in the rare situation you do get audited, any professional you find will be just as good or better than the one assigned to your by H&R Block.
- If your tax situation is more complicated, build a multi-year relationship with a tax accountant, someone who will be around for you at any time, not just during tax season.
Neither TurboTax nor H&R Block is winning the war of tax preparation. There are other alternatives, all of which are not presented by companies with the marketing power of H&R Block and Intuit. TaxAct offers free federal tax return filing, and other services exist for completely free tax filing if you meet certain qualifications. Free isn’t always the best answer — complicated situations require individual attention, support, and representation from an Enrolled Agent or CPA you can work with over a long period of time.