A LITTLE THIS-A AND A LITTLE THAT-A – WITH THE EMPHASIS ON THE LATTA

* I recently posted about the problems with Refund Anticipation Loans (RAL) and the companies that offer them. A commentary on the stock of Henry and Richard titled “H&R Block: Stars Are Aligning” had some interesting comments on the importance of RALs to fast food commercial tax preparation chains -

“For example, in fiscal 2009 Jackson Hewitt (JTX) derived $59.9 million of revenue from “financial product fees.” According to analysts and company representatives, greater than 85% of this line item was RAL and RAC fees that have minimal associated costs (according to management it is roughly 80% margin). At 80% margin this represents 104% of pretax earnings of $45.9 million. Simply put, Jackson Hewitt loses money without RAL and RAC fees.

Another large competitor, Liberty Tax, generated $23.8 m(illion) of revenue in ‘bank product and tax discount income’ versus $20.8 million in pretax earnings. Assuming Liberty Tax’s financial services revenue has similar margin characteristics to those of JTX’s, Liberty would also generate almost all of its earnings from RAL / RACs.”

* A post from TAX PROF Paul Caron on “Testimony at Yesterday's Tax Reform Task Force Hearing” led me to read the testimony of John Irons of the Economic Policy Institute at a recent meeting of the President's Task Force on Tax Reform.

On the subject of “Simplicity” Mr. Irons says –

“First, you should take Austan Goolsbee’s advice on the Simple Return, which allows the IRS to fill out tax returns and mail them to taxpayers who could then simply sign and return.”

I am surprised that this idea is still being seriously talked about. It is a Very Bad Idea, as I pointed out in a post with that title back in October of 2007 when BO proposed the concept during the Presidential campaign -

“Taxpayers should be allowed to determine if they will claim the standard deduction – and not be told, or even suggested, by the IRS that this is what they should do. Individual situations change from year-to-year – how does the IRS know that a taxpayer is better off filing a short-form simply from his W-2 and Form 1099-INT information. Taxpayers should also be allowed to consult a competent tax professional to determine if the standard deduction or a short-form will result in the least tax liability.

Let’s face it. There are a lot of taxpayers who would save mucho dinero by itemizing or taking advantage of various other tax adjustments or credits – but who would simply sign a short-form and pay a lot more tax then they would or should have to if the IRS sent them a pre-prepared return and requested a signature.

And looking at the issue from the government side – who is to say that the only income a taxpayer has to report is included on the W-2 and Form 1099-INT information that the IRS has in its computer matching program. Besides, pre-printing and mailing out such forms would be a waste of the government’s money.”

* This has nothing to do with taxes. As a “twit” I do not "follow" many other “twits” – mostly fellow tax bloggers and tax professionals. However I do follow the step-father of my cousins Nell and Anna - Michael McKean, the actor of “Laverne and Shirley”, “Spinal Tap”, and “A Mighty Wind” fame who is currently appearing on Broadway in “Superior Donuts”.

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Michael recently participated in some specialty tweets under the categories “#cowfilms” and “#oxymorons”.

Cow films (from Michael and others) –

• Even Cowgirls Get the Moos
• Dirty Ranching
• Beverly Hills Cow
• The Udder Bovine Girl
• Barn Free
• The Pasteurization of Emily
• S'cream

Oxymorons (from Michael) –

• Fox News
• Larry King Live
• Greater Newark
• Reality Television {my favorite!}

Michael is good to follow on Twitter, as he often “tweets” entries in similar cool categories.

TTFN

I TWIT, I WROTE, I TWEETLY TWEET, I TRY

I have absolutely no use for “social network” websites like FACEBOOK, MY SPACE, YOUR SPACE, OUR SPACE, PLAXO, etc.

I am not looking to make new friends – I have plenty, thank you. And if I needed more I would not seek them from among potentially psycho online strangers.

If I want to share information or pictures with family and friends there is always email. Or postal mail.

I am not seeking new 1040, or any other type, clients - so I do not need to use social networks to solicit new business.

I did, however, join the ranks of Tax Pro Twits on Twitter.com at the suggestion of fellow blogger and experienced twit TAXGIRL Kelly Phillips Erb, and have been a twit (is that the correct term?) for many months now. I must admit it ain’t so bad.

I use Twitter to announce new blog posts at TWTP and, occasionally, the NJ TAX PRACTICE BLOG, to “retweet” items of interest from other twits, and to report on interesting tax and finance related online items that I have found in my “wanderings” on the web. On occasion I ask for help or info from my fellow twits on a tax or financial subject or topic. I also use it to respond to tweets and calls for help from those I follow. I often use the “direct message” feature in lieu of an email. And when I get more involved in my “self-publishing” of tax reports I will use Twitter for promotion.

While I invite unlimited “followers” from all disciplines, I myself “follow” very few twits – for the most part only fellow tax professionals and tax and personal finance bloggers. I also follow my local newspaper. I have not yet come across any family, friends or clients who “tweet”. And I certainly have absolutely no interest in the personal blatherings of the likes of Ashton Kushner or Brittany Spears.

I am amazed at those who follow thousands of twits. They are inundated with endless tweets, a great majority I expect consisting of mindless dribble, and I cannot fathom how they make any sense of it or actually find the time to read them all. I find it just enough to follow my 50+.

I follow tweets to learn from other tax pros and bloggers the same things that I myself tweet – new blog posts and tax and finance related items of interest.

I must say, and certainly no disrespect meant to any of my followers, that I could care less what cute phrase one’s “4 yo” uttered, or what one’s “3 yo” did to his/her siblings. Or, for that matter, where one has decided to go for lunch or dinner. I am not interested in the more “social info” aspects of the network, although I do sometimes find twits of a more personal nature from core colleagues to be interesting. I will admit that I am a bachelor living with a cat (who firmly believes in the old adage that “children should be neither seen nor heard”), but if I had young children of my own I might be empathetic or sympathetic to tweets about what one’s kids are doing.

So to sum up – I use Twitter to announce my new blog posts, to learn of and pass along new blog posts of others and tax and finance related information and resources, to keep up with fellow tax bloggers, and to promote my “products”. It doesn’t cost anything (I am at a loss to understand how Twitter.com makes any money) and it “couldn’t hurt”.

Hey – follow me on Twitter at "rdftaxpro".

TTFN

TO TWIT OR NOT TO TWIT

After reading TAX GIRL Kelly’s post “Twittering Tax Pros, Take Two”, and further email encouragement from Kelly, I decided to become a “twit” (note to Tres Hanley-Millman – I am a “Twit” now, too!) myself and see what all the talk is about.

As I told Kelly, I abhor social networking sites like MY SPACE and FACE BOOK. I am not looking to make new online "friends" and have absolutely no intention of putting my personal information on a public site for all the world, including identity thieves, to see.

Twitter seems to be different – and if it can help to bring more traffic here to TWTP then it is worth a try.

It is way too soon to proclaim, “I’m a tax professional and I love to Twitter!” I will reserve my judgement until I see how it plays out.

FYI - I am twitter.com/rdftaxpro. Check me out.