* 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”.
“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”.
.
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
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
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