The race to the bottom in tax services led by Intuit's TurboTax software and its competitors has claimed perhaps an unexpected victim--H&R Block. The ubiquitous leading brick-and-mortar tax services chain has finally yielded to the pressure from TurboTax and its own software (H&R Block Tax Basic is offered for as little as $10.50) and announced it was closing 400 locations across the country.
H&R Block charges on average $200-$300 for a personal return and $400-$600 for a self employed return. The chain lowered its sales and profit margin outlook for the rest of 2018 and the company's stock dropped nearly 20% right after the announcement.
Ironically Intuit has been raising its prices on its TurboTax product. An average 2017 tax year personal return (very basic returns are still free) is $80-$100 and a self employed return was $120-$180. Tax year 2018 prices are expected to be even higher.
H&R Block CEO Jeff Jones said the decision to shutter the offices was part of a decision to consolidate locations in an effort to reduce fixed costs and that its workforce was actually not shrinking as displaced workers would be relocated--usually only five miles on average.
H&R Block has a loyal following but has had trouble penetrating the Millennial and Gen-Z demographic.
"Our client retention is very strong, but new client growth is not where we want it to be," admitted Jones.
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