Online tax help

New feature is a sign of a competitive tax season


Senior tax advisor Noemi Munoz, center, prepares tax returns for Manuel Bustos, left, and his brother Maximo Bustos. Online assistance and smartphone apps are two new features taxpayers can take advantage of this year. (The Associated Press)

Published: Thursday, January 5, 2012 at 2:25 p.m.
Last Modified: Thursday, January 5, 2012 at 2:25 p.m.

New York

The competition for your tax business is heating up.

H&R Block and TurboTax will both offer live online professional help in the coming tax season, aiming to draw customers nervous about making mistakes or missing out on refund money.

The two companies are also providing mobile applications that enable users to file their tax returns using smartphones and tablet computers, and reloadable prepaid cards to use to receive refunds.

The similarities reflect a more competitive business for tax customers as the economy continues to struggle. With high unemployment expected to linger, the total number of returns filed isn't expected to grow much in coming years. And with most paper-and-pencil returns now converted to e-filing, the companies will increasingly have to compete for the same taxpayers to expand their customer base.

Younger taxpayers who file simple forms are the most specific target. Both companies hope to establish relationships with these customers that will last as their financial lives get more complex and their tax returns more expensive to prepare.

The two companies combined handled more than 45 million returns last tax season, a third of all returns filed.

TurboTax, the popular software produced by Intuit Inc., has added certified public accountants, enrolled agents and tax attorneys to its ranks who will be available to answer customer questions as they prepare their returns. The expert help, available via text-based online chat or by telephone, will be in addition to the Q&A available with other customers that the company has offered for several years.

The professional assistance is designed to appeal to customers who have hired someone to handle their taxes in the past and are now trying the do-it-yourself software. "This is one of the pain points that people who use a pro tell us they have," said Bob Meighan, a TurboTax vice president.

"Block Live" goes a step further, offering live video chat with its tax professionals, in addition to text chat or telephone consultations.

CEO Bill Cobb said preparing taxes using video chat will duplicate the experience of going to one of the Kansas City, Mo.-based company's 11,000 offices. "It's the natural evolution of our sweet spot, which is assisted tax prep," he said in an interview. "It's the same experience."

The offering is part of the Block's aim to work with taxpayers in whatever medium they prefer.

But Cobb and other Block executives emphasized that the market for assisted tax preparation has not been overtaken by the digital do-it-yourself. They cited Internal Revenue Service statistics to show that the growth in digital preparation, which has overwhelmingly benefitted TurboTax, has largely been at the expense of pen-and-paper preparation. Assisted preparation has remained about 60 percent of the market for the past decade, while do-it-yourself has stayed at roughly 40 percent.

New mobile applications from both companies are aimed squarely at the younger market. TurboTax offered its "SnapTax" app for smartphones last year, and added a tablet version for the coming season. Block is also debuting both a smartphone and tablet version of its software. With both companies' apps, users can take pictures of W-2 forms and other documents, and the programs will extract the data and fill in tax forms.

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