- Written by Accounting Today
John Hewitt, the president, CEO and chairman of Liberty Tax Service, is anticipating increased business for preparers this tax season thanks to the Affordable Care Act and the boost in employment from the increasingly robust jobs market.
Hewitt founded Liberty Tax Service in 1996 after leaving Jackson Hewitt, another major tax prep chain that he co-founded back in 1982. He built them into the second and third largest tax prep chains in the country, right behind H&R Block, where he worked his way up from tax preparer to regional director.
Hewitt believes the ACA will make this one of the best tax seasons ever for preparers as more taxpayers come to professionals to have their taxes done.
“It’s the biggest tax change since 1986,” he told Accounting Today in an interview Thursday. “Tax change is one of the three primary drivers to people choosing to come in and get assisted preparation, and so it’s going to drive people from the capability of doing their own return into seeking assistance. In addition to that, more people are going to file, and also tax preparation fees in general are going to go up because of the additional complexity, and in this industry we charge on the complexity. So three major impacts: more people will file, a higher percentage of people will seek assistance, and thirdly the industry will get higher fees because of the increased complexity.”
On top of that, the increase in the employment numbers over the past year is likely to induce more taxpayers to seek help from preparers. “More people were put to work in 2014 than any year in the 21st century so that’s going to drive more people to file their return,” said Hewitt. “We think that about 3 million more people are going to file this year.” He anticipates over 60 percent of them will go to a tax preparer.
Obamacare is widely expected to be a major hurdle for many taxpayers and preparers as they cope with new forms and requirements that could force some taxpayers to give back the subsidies they received in the form of premium tax credits for buying health insurance from the exchanges if they made a mistake in estimating their income.
So far, Hewitt said Liberty Tax hasn’t experienced those kinds of problems. “That’s yet to be seen because the forms are just coming out now,” he said. “We’ve already prepared a couple of hundred thousand tax returns and anecdotally it hasn’t been a problem yet. I’ll say this: whenever a taxpayer owes way more money than they thought or gets a refund way less than they thought, they have an issue with it, but we haven’t seen any significant signs of that yet this season.” Liberty has been giving its tax preparers specialized training to familiarize them with the provisions of the Affordable Care Act and even encouraging franchisees to help customers get health insurance.