LIBERTY TAX SERVICE Franchise Complaints

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• The IRS has not stated why they had the problem this year. Last year the IRS was hacked, and 104K files were a problem.

• Two different things going on there. Guest is right that the delay in IRS processing the returns (most not funded until 2/10) was all IRS for whatever reason. That's not Liberty corporate's fault. However that's not the delay others are talking about with Zees getting paid. That was all corporate. The payments for 2/10 refunds came to Liberty on evening of 2/8 (some of the Netspend refunds for 2/10 processed then), or at WORST morning of 2/9. Usually then franchisees get their ACH notice the next day, so 2/10. Many did not get paid until a day or two after that. Call it a technological glitch, a cashflow problem, a pure quantity issue, I'm not sure what it was. However, that was the delay that corporate did have control over. Many had the 1st payroll from peak payable that Friday, so a delay of a couple days was critical.

  Something is indeed up with the IRS this year, but corporate dropped the ball yet again too. Hopefully they get it under control and rest of year is smooth. I'm less concerned with the delays than I am with the drop in number of filer using paid preparers so far YTD. Not just Liberty but industry wide. That is down 10% as of 2/5. Lots and lots of preparers are going to be struggling and I'm very curious to see the big 3's numbers once they announce. Don't go simply by fees or returns. Back out freebies and also remember on Liberty end that everyone that got a loan has inflated Liberty's sales by $45, as they are counting those in the sales figures, but the Zees never really get that money as they are paying it out (a $250 return with a loan only really is a $205 return to the Zee). It would be like them counting the bank fees in their sales figures. To get "real" year to year comparison, they'd need to announce sales, then subtract the # of loans x $45. Also should only be reported as the number of paying returns, with freebies being a separate category. Then you'd know the real health of the stores. Won't see any of this detail though, as it's not required, but that's unfortunate. Would really like them to report number of stores up in paid return count, and number that are down. That would be an interesting read.

• One thing that Liberty has not thought about is the long term effects that charging everyone that receives an advance the $45 dollars. If word about it gets out, the zee's will be the ones that will catch the flack. The taxpayers will not come back and they will start crying long and loud about being ripped off.
  Through banks working with Drake we were given the same option for the advance. The problem we had, was that if we chose that option we would have had an additional $30 dollar fee applied to all bank customers. We did not choose that option. Our commitment to our clients to bring them professional work at a reasonable cost would not all us have that charge to all bank products. Even though only a few would want an advance.

• Out and glad: If I understand what your saying the banks offset the cost of offering this product and possible losses from offering the advance by charging all bank customers an additional $35.00. Figures Liberty would be involved in it.

• We were not to add $45 fee for the loan just to those customers that got it, that was strict regulation. That said, I'm sure most Zees figured out the % of loan customers for early season, and then added a fee to all returns to cover that money (say $35 or something similar). Problem is, they also do that for $50 CIF. In the end, you are adding $70-100 to each return in gimmicks and fluff. The customer is getting this back in the form of the $50 + a "free" loan per say, but all they see in the end is that their return fee was $400. They don't think about the extras. Some aren't concerned about the fee, but many are. Hence the sharp decrease in numbers this year. You can only play the shell game so long. What I'm saying is that when corporate reports sales, they back out CIF and don't include bank fees. This year though they will include the extra fluff added for loans. That is in essence a falsely inflated sales figure, even if it's legally correct. The owners are not really making that, as it goes to the bank, same as the RT processing fee. If even half of the customers in the early season got this, that will inflate the sales figure by at close to 10% probably. $45 extra for half the return on top of an ANF of $300. This means if they aren't reporting at least a +10% sales growth, they are really flat or declining YTD.

• Anon..where did you hear that paid prep is down 10 pct.? Thanks. Does anyone else have any stats?

• You only need to be concerned about the advance if lots of folks took it. Did'nt have to worry about prep down until now. I think mid and late season could be a problem. Had a great start. By the way, not a plant (so sorry). Maybe you noticed Block had gimmicks this year also. We have a good start for rest of season due to the early start. I don't think it worked for everyone but early start was good idea. Self prepared with help and apps will kill stores that don't have experienced staffers. I think that goes for all of us. Lib. JH. Block Mom and Pops. Still busy so far.

• Bill, the adding of $30 dollars to all bank products would have been required since we are considered a mom and pop. That would have been on top of the normal $28 dollar charge.
  Since Liberty is larger, they might have a different amount.
  No matter what it was not cost effective for our customers.

• IRS stats as of 2/5 show paid prep down 10% and total returns down as well through 2/5. Self prep was up 3%. Total IRS returns down 1 million YTD. It's kind of weird. Unless the 1095A/B/C's are confusing people and they are delaying filing. Unemployment has actually improved, so there should be more people filing, even if it was self prep. I'm not sure what the stats are pointing too, just what they are.

• https://www.irs.gov/uac/Newsroom/Filing-Season-Statistics-for-Week-Ending-Feb-5-2016 the trend is bad for all people in the business.