LIBERTY TAX SERVICE Franchise Complaints

5,730 thoughts on “LIBERTY TAX SERVICE Franchise Complaints”

• ^^^Bingo, Sara EA. Something that we can agree on. :)
  Posting is well said. When Liberty goes under, he’d better be in jail.

• Sara EA – time and changes will clean up the problems. I agree that the company should have shut down the stores with major problems.

  Next tax season – first refund payments for returns with the earned income tax credit will be on February 15th and after. Thats a game changer. Means no money until mid-February. Also gives IRS time to send letters instead of refunds. No need for customers to pay high fees or try to file with a last check stub since most W2-s available by January 25th.

  This is being kept quiet. Just think about how many tax offices will need a loan to cover expenses for an extra 2 months. Then think about the risk of waiting.

  Angry customers if you don’t tell them the refunds are’nt coming before then.

  Game changer for more than just Liberty. Franchises not selling anyway. Lot of stores up for sell – more than just Liberty stores.

• The Tax prep business is undergoing fundamental changes. With the sdvent of better and inexpensive software, fewer and fewer people are relying on paid preparers. Liberty is doomed because of this fact. Liberty is also doomed by their fraudulant practices. The business model that Liberty espouses is no longer valid. You would have to be nuts to invest in a company like this.

  With all the negative publicity Liberty has experienced and rightly so, I see that people are getting a little wiser to the scam that they actually are. My experience in being instructed by Liberty management in how to conduct fraud is a good example. These are basically dishonest marketing people led by John Hewitt.

  Best advice: Stay away!!!!!

• Guest, I was startled by your statement that the delay in refundable credit refunds next filing season is “a game changer.” (By the way, returns with Additional Child Tax Credit–another refundable credit– will also be delayed.) I had not realized that so many of those returns were paid out of the refund. “Means no money until mid-February” and franchisees “will need a loan to cover expenses for an extra two months.” Makes me wonder: How many Liberty clients actually pay for their return out of pocket and avoid the fees associated with refund anticipation checks? What kind of clientele does Liberty have?

  Surely there must be Liberty offices that have clients who actually pay for the work. When I worked at Block years ago, most of the “first peak” clients opted to have our fees withheld from their refunds. After that, almost all clients, including mid-February clients, paid out of pocket. Where I am now we do very few EITC returns and do not have any bank products; clients have to pay us. Almost all do. Well, a very few ask if they can pay when their refunds arrive, and a bunch (non-EITC) prefer to get billed. Most pay up front, or send what they can when they can. We have one client who goes on extension every year, and when he brings his stuff in August also brings a check for $1800 for last year’s return. He’s always a year behind, but we always get paid.

  Is it typical for Liberty stores to have only first-peak, no cash up front, clients? Boy, are they in trouble.

• No. The delayed refunds effect approx. 30 million people. This effects HRBlock, Jackson Hewitt, Liberty, and many thousands of mom and pops. Bank products are used by thousands of tax businesses. There are middle income families that get the child tax credit and the earned income credit. Even if they pay out of pocket, they are counting on getting the refund soon to replace the cost of fees. I have at least a thousand clients that pay directly, but will have to plan for the delayed funding from the ones that don’t. All large retail tax offices will be effected by the delay and so should small to mid sized tax offices.

• It seems most franchises have gone through changes. The changes have been solely in favor of the franchisor. This is true in the insurance industry with captive agencies such as Allstate, Farmers and State Farm etc. They pay these people with a 1099 and treat their agents as employees. They seem to have gotten a hold of a LTS contract because most companies are screwing the people who make them and bring in their income.

  The IRS really needs to look into all franchise companies due to the fact they pay as an independent contractor but have many requirements as an employer vs employee relationship. LTS is no different. They treat their “independent contractors” as an employee relationship, but offer no benefits and require absolute fidelity and threatens them constantly financially.

• Agree that there are so many restrictions on Liberty franchisees that it does seem they should be treated as employees. FedEx has had a lot of trouble in this area.

  Insurance industry is a poor example. Insurance agents are statutory employees, meaning they are treated as employees for FICA purposes but deduct their expenses on Schedule C.

• Big difference between State Farm, Allstate, and Farmers. Allstate and Farmers agencies can be sold if the office owner can find a buyer. State Farm offices cant be sold. Agree agent is employee. Insurance offices that can be sold are worth more than tax offices. Wish I had discovered this 5 to 10 years ago. Would have combined tax and insurance back then. Its too late now.

  Franchizee – I agree more regulation is needed. The next big ‘oh no story’ will be franchised sub shops – again. New ones are popping up in my area daily. Bunched together in middle to high income areas. All of the Quiznos’ are gone.

  Thanks to the ‘unhappy franchisee’ I have learned lots and saved lots of money.

• SaraEA- Insurance agents who are owner/operators are all paid on a 1099 as independent contractors, not a W-2 with the Statutory box marked. The contracts are very specific for IRS purposes stating they are independent contractors.

  Now the difference is, once an independent contractor agreement is approved by the lawyers and IRS, the companies gives a new agent a very liberal contract and they treat them strictly as an “independent contractor”.

  As the years go by just like LTS, the contracts start to morph into just as you stated as a Statutory Employee. However, the contract still states “independent contractor” and is paid as such. But the companies treat the “independent contractor” as a statutory employee. That is the same as LTS and the rest of the franchise system.

  In order to keep your contracts you must jump through all these hoops and make sure you do everything they (any captive insurance agency or franchise system states) or they will pull your contracts.

  With regards to Allstate and Farmers, their are very unhappy people in all the insurance systems. They are brow beaten to no end. It’s true they can sell, however it is similar to LTS, they usually can never find a buyer that “qualifies” to the franchise system. When trying to sell my LTS store, it was a complete joke and it was set up to hand the whole territory back to them.

• Does anyone have information about how the convention went? It was last week.

• I was just wondering the same thing. I saw on Danny’s facebook a bobble head of John Hewitt.

• I’m more curious about any recent news articles like the Baltimore ones…….PLEASE, whoever can link news articles here, that would be very appreciated. It’s good for the articles to be listed on this site anyway. Keep the articles coming. Any Franchisor that admits that he calls the IRS on his own franchisees should have his head examined. And the IRS does not let up until they find something, no matter how small. Even if it takes years. Because, again, it’s easier for the IRS to go after the little people than it is going after the big guy, who causes all the problems to begin with.

  The public needs to know what a scam this company really is and how disgusting the franchisees are treated. Especially the big producers, which is ridiculous in and of itself. How many awards has Hewitt bought for himself? Entrepreneur of the Year?!? Disgusting.

  Potential franchisees beware: I wish this site was around when I laid out $$ for a horrible, horrific experience. By the way, where’s Bill?

• Boy, I just started googling Liberty Tax and came across way too many negative lawsuits, websites, articles, etc.

  http://liberty-tax.pissedconsumer.com/

  ^^Love it! :) So why, then, is the DOJ taking so long to get these bastards? Hope JTH is squirming in his pants about now………

• Looks like Liberty stores, on average, did about 500 returns per store. 4th Quarter report is out today.

  I know some stores do better than others on return counts so the numbers I see say more franchisee’s will be closing their offices. If you are an outsider, looking to get into the tax business now, don’t do it. Block and Liberty lost market share this past tax season. It will only be getting worse for them

  Save your money and stay away from this business model.

• Yes, about 430 returns per location in the U.S. At $228/rtn, that’s $98K in gross rev before royalties ($19K), wages ($15K), rent ($15K), utilities ($4K), franchise fees ($10K if applicable), interest on operating capital loans ($1K), local marketing ($3K), RAL fees, etc

  Location count probably will decrease next year. Liberty is pulling out of “seasonal” locations and closed 2% of their offices to fraud last season.

  A 5% price increase plus financial products and the $5 RT fee increase put a band-aid on a bad season. How much was Liberty charging franchisees for the RAL? Kathy Donovan said they took a cut of the fee.

  Anyone know why Hewitt sold 600K of his Class B stocks…just wanted to sell?

• I was an employee of a Zee and had two very different experiences.

  The good: the Liberty I worked at was partly owned by a CPA though he didn’t have anything to do with the day to day running. Each office had at least one experienced and knowledgeable tax preparer who came back year after year. This person was paid pretty well between hourly wage, overtime, and bonuses. They had a strong core. Then there was the typical revolving door of preparers from the tax school. They took care of a lot of the clients – certainly the simple ones – and could ask the experienced workers if they had questions. One of their offices was in a high AGI neighborhood and never did very well. A couple did okay and one was in a great, low AGI neighborhood with good foot traffic and did great as long as there was a waver there.

  Then the owners sold the franchise.

  The new owners fired or drove off all but one of the best – AKA most expensive – employees (I was one of the ones who left) and tried to focus on the tax school to bring in more new preparers. Unfortunately, they couldn’t find enough people who could understand taxes and ended up so understaffed that they had to close several office because they couldn’t staff them.

  I don’t know much of what happened after that, but I do know that no Send-A-Friend payments got sent, no new wavers were hired, and employees’ W-2 were incorrect.

  They ended up with first-year preparers being alone in offices and having no one to ask if they ran into questions. I can’t imagine what the clients thought of preparers who barely knew anything about taxes and had no one to ask. Returns that should take a day took weeks if they ever got done.

  Errors skyrocketed. Demands for refunds went unanswered. In short, the worst customer complaints you can think of.

  In short, The System isn’t enough. You need to know or have at least a few employees who know taxes really well and it can work.

  But I wouldn’t ever recommend it. If you know taxes or have someone who does, I think you can do better on your own.

• Now that more info is coming out about the refund delays next tax season, I’m beginning to think this may affect Liberty franchisees in a painful way. All refunds with EITC or the additional child tax credit will be withheld until Feb 15–not just the refundable credit part but the entire refund. This is meant to thwart refund fraud by giving the IRS time to cross-check W2s, 1099s, withholding etc. (which businesses will now have to give to the IRS by Jan 31, 2 months early for most of them). And since crooks file as early as they can to get the fake return in before the real taxpayer files, it will give those real taxpayers 3 more weeks to file so the IRS can notice duplicates before any money is paid out.

  Clients who get these types of credit are mostly lower income so I assume the majority have their tax prep fees withheld from their refunds because they can’t afford to pay out of pocket. That means franchisees in these areas won’t have much income until mid-February but they’ll still have to pay their staff, rent, etc. How many of them can’t do that? Does anyone predict many are going to throw in the towel before next tax season begins? This can be a boom for Block, which owns most of its stores and has access to enough capital to keep the lights on before the money begins flowing in.

  I don’t think this change will affect the number of clients coming in for tax prep. They won’t get their money any sooner if they do it themselves or use a free outlet. It could very well affect the number of choices they’ll have to go to if most of the Libertys and Jackson Hewitts are closed.

• I think in my state, H&R is no longer a franchise but owned by the company. So, SaraEA might be right about having money from the main office to support till money flows. But H&R is also closing long term locations and consolidating, so they know it will be very tight year.

  One of the LTS offices is no longer in a location as of May 2016 in my town. So that could be one less franchise office in my state. Also in another location there was two office in adjacent towns, and that zee went to just one to conserve his funds.

  With regards to the funds being withheld, I agree more and more people are going to close additional locations and Jackson Hewitt may not be in Walmart much longer, nor H&R be in Sears in some locations. I suspect those temporary locations will cease to exist.

  As for an independent like me, only 7% of my clients use a bank product for refunds, most of my people pay up front, versus a typical LTS it’s pretty much the opposite.

• The stable offices will survive, but it’s time for any tax office planning to stay in the business longer than a couple more years to hire experienced preparers. Gotta get customers who are not interested in a bank product and don’t want to do their own return. Plenty of them but they won’t pay high fees.

  The big deal will be how many refunds won’t come because the return does’nt match the forms submitted by employers. Then what?

  If I was a self-preparer, this is the year I would not prepare my own return unless it’s real simple. I see phone calls and letters.

  Now that I’m thinking about it, we should probably increase the fees about $10 per client, bank product or not.

• When I started in taxes, the first payment was around the 21-25th of January and it just kept on a coming. Now we are looking for mainly LTS and JH and some H&R in low income neighborhoods are going to hurt and need cash infusion prior to the start of money coming in on Feb 15th.

  It is good to know in advance of the delay. I told several of my people earlier this year and documented their files of the delay. Luckily I don’t have many. I try and not advertise to those clients.

  What I think will happen, is it will force offices to consolidate and it will help small independents like myself to have more of the regular people since the other offices will be bogged down with complaint’s, and phone calls until the money flows.

  Boy it will be on heck of a pay day come 02/16/2017 for some offices if they can survive.

• Franchizee I agree. True! Especially if an office does’nt tell the customers the truth. I’m surprised at the rumors about returns being prepared with a last check stub. Happens all over, including mom and pops. Customers paying more because they think they’re getting more. No need for them to ask about last check stub. Everybody waits for W-2’s. I like that. Fair chance to compete.

• I believe many of us know that many of the early season tax filers at Block, JH, and Liberty are EITC ones looking for their yearly jackpot. Don’t mean to be disparaging with that remark so please follow my point in this comment. So, my point is that some of these filers are going to have a hard time believing or understanding this new ruling. Their skepticism is going to cause them to go somewhere else. It looks like this could hurt Block more than JH and Liberty since Block has the largest client base.

  Watch for some real creative gimmicks by all three to keep their clients. Not sure of the legality of it but could Block and the rest offer interest free loans against these tax filers future refund? What else they come up with will be interesting, but only more games played for and on these types of customers. Sad but true!

• SanFranDan, I read back a few months and I’d love to hear your full story. When are you going to be allowed to share it?

• John H has a new book out on how to be a success. He is going out on a book signing tour.

  Why did he need to write a whole book to tell others how to be a success. Here is his success in one sentence: Convince as many people as you can to buy into your scheme of a tax business and to have them fork over 19% percent of their revenue each year.

  Pretty simple. The only one getting really rich is John. If you want to pay to be a Liberty Corporate slave go ahead and buy your ticket to torture. John will thank you and maybe even give you credit for increasing his wealth in his next book – “Thanks to all the Suckers Whom Made Me Rich”

• Sad..nice posting…Admin we need a like button.

• Thanks Mike!

  I am not bitter one iota over what John H. does to earn his riches, and I mean riches! My goal is to inform the public, and specifically those looking into buying a Liberty territory that your chances for success are small.

  Just so you know, Liberty Corp. makes a good profit at the expense of profitable and unprofitable partners in their system. You could have a money losing territory and you still have to pay the minimum royalties. Ouch!

  Save yourself the grief and save your money by not investing in this one-sided win win for John but lose, lose for the franchisee.

• Hello 2chains……….my experience was so unique that I’m afraid to tell my story anytime soon on this forum. I have a feeling it would identify me rather quickly to HIM. I’m afraid that he will still come after me as he did before. What I can tell you is that everything I wrote is true and my biggest regret is signing on to this ‘franchise’ many years ago. I lost more than just the time and the $$. I lost my dignity, my innocence, my trust and my confidence. [[ I can also tell you I learned a TON about our legal system on the State and Federal level.]] It is one messed up system. What happened to me should NEVER have happened. But unfortunately I don’t have the clout or the money to fight anymore. In fact, I fought more than Liberty thought I would and as a result, they came down harder on me. I’ve been wanting to write a book on my experience with the names changed………..if I can motivate myself to actually write it, I will.

  I also learned how sleazy people can be. Boy was I ignorant. I was also one of those ‘people’ that did my job well and expanded into several other offices. They like to go after the successful zees, weird, huh?? The things I learned about HIM are enough to choke. HE needs to be caught and sent to prison for a long, long time.

  Sad but True: I also like your posts. Not only do you pay the minimum royalties on a losing territory, but you can’t sell them and then LTS takes them back and resells them to some new poor idiot for thousands all over again.

  It’s freakin’ amazing that this has been able to go on for so long and the Government is turning a blind eye. Because look at how much revenue is being pumped into the system :(:( When will it end?!?!

• Thanks SanFranDan!

  I try to be purposeful in my postings, with the purpose of giving truthful information about the consequences of buying a Liberty territory. I believe SanFranDan 100% that what she says has happened to her was indeed inflicted on her by Liberty Corp. I too keep much of my personal situation out of my comments because I do not trust Liberty Corp as they do seem to be vindictive.

  So, potential investors, whom will you believe? We have nothing to gain other than telling you what is inevitable; in my opinion, Liberty Tax will fail in about 2 to 5 years. Trust me on this, they will either sell out to Block or JH or just be worthless and close-up. What will be the status of your investment then?

  This last quarterly report is typical of how the franchise tax business works. Liberty Corp. Virginia Beach makes a yearly profit and beats analysts expectations. During the past tax year fraud was found at many Liberty locations. Also, return counts system wide were down. These facts are indicative of Liberty Corporations partners being accused law breakers (fraud) and tax industry trends of tax clients wising up to the price gouging at Block, JH, and Liberty. John gained and the franchisee’s lost.

  If you want to join this system, well good luck, you have been warned not to. Just shy away from the fraud part; crime does not pay. As for the client base shrinking for these 3, it will continue and you will probably fail. Sorry, I am a positive person but also one that does not lie to myself about reality. Liberty is going to fail but one man will die a millionaire from others misfortune. Sad but true!

• I agree with Mike – The gimmicks are going to be pretty outrageous and probably verge on the edge of being illegal.

  With LTS and JH, the Zees will carry the cost of “free” everything to get the customer in the door. They will probably pay the interest and any extra fees on the loans without being able to charge for them, just like last tax season.

  H&R depending on many of their offices are still franchises, will transfer the cost to the non banking people, which where an office like mine will shine! Hearing through the grape vine, H&R has esculated the cost of their returns by 300% in my area, so I am hoping some of the people will mosey over to my neck of the woods.

  So, that is how I see it and I am calling it. LTS and LH being more of a franchise business will make the franchise pay all the costs associated with bank products where the franchisee will not be able to recoup the expense and since H&R is mainly owned by Corporate, they will shift the cost to the non banking people to pick up the cost of their first season people.

• ^^And I’m still wondering what happened to Bill…

  It’ll be survival of the fittest moving forward. That means little moms and pops should do way better than the franchises just by the fact they have people in there that know how to do more than a simple tax return! That means YOU Franchizee! :)

  Sad but true: You really think it’ll take as long as 2-5 years? Jeez, I was hoping on much sooner :(

  I hope H&R’s corporate offices whip the pants off LTS. I really don’t care, I just want to see the demise of LTS as soon as possible and the CEO behind bars where he belongs.

  We’ve stopped countless people (several hundred I’m sure) from joining this money losing proposition. People that do enough due diligence should be able to pull up this forum and read all the negative comments………it gets more worse than you can ever imagine. Unthinkable, really. JUST. WALK. AWAY. Maintain your sanity and your bank account and move on. It’s a lose-lose no matter how you cut it. There are so many people posting here that have been there and wish that this forum was around when we sunk our money into this con-artist’s haven. He certainly learned how to perfect his “rip-off” skills over all these years. And it shows.

  Please post any and all news releases………regarding fraud in Baltimore or anything regarding LTS at all………..it’ll go a long way to have the info. present and center here for prospective franchisees to see. If there really are any new prospective franchisees left! :):)

• I agree next year the promotions/gimmicks will hit an all time high or low depending on how you look at it. And that will only continue to decrease the value of professional tax preparation in the eyes of the general public. I couldn’t believe it according to LTS financials LTS was down to 1.7mil in cash on 1/31/16. Next year they could easily run into issues. Block has the resources to not skip a beat from cash flow. It will be a nasty storm to ride out until the waters settle I bet Block is the only surviver how badly bruised only time will tell but I doubt it takes 5 years for the LTS ship to sink. Hopefully closer to 2 years. “It’s only when the tide goes out you discover who’s been swimming naked. – Warren Buffet” and the tide is well on its way out!

• Those whom owe Liberty for loans are going to be in trouble. Liberty may not be so patient with you when they have very little money to intercept come the first part of February.

• Thanks SanFran! Once LTS is gone, we all need to meet and have fun! Send the bill to John. HA!!

  I think H&R has been planning this for quite a while, which is why they have been buying up their Franchises. But with the regulation for an average tax preparer is being debated and worked on, H&R will feel the pinch just like the others. H&R has resources, but that only goes so long as people are willing to plunk down $300 – $400 for a simple return, where they used to pay $180 or so.

  I don’t see a great future for H&R but I do see a lot less locations where 4 years ago, money was flowing like a fire hose and now it is slowing up. The average taxpayer needs more services than just putting the information in the correct box (which is very important) but need advise and planning as the tax bill keeps going up.

  I don’t see most box stores having those people in the droves, because they are all running for the EIC people which is fast cash.

  Hey, NCHillBilly – Where have you been? We miss hearing from you!

• First of all, it’s obvious that John Barilla is actually John Hewitt. No one else could ever have that many nice things to say about JTH and Liberty except that narcissist. (or someone he paid to say those things about him)

  Sorry, I know he hasn’t been seen for a while but I was just reading some old posts that included replies from him. I don’t know why he kept accusing others of posting with multiple names. Though the other pro-liberty posters also disappeared about the same time as him… odd.

• ^^^2Chains: Oh how right you are.

  The ADMIN. from this website was able to figure out that John Barilla (Barf villa, as I called him) was using multiple aliases. Not the posters he accused, just himself. We all figured that out very quickly who he was and what his “shtick” was all about. Good riddance. He is not missed in the slightest. Yes, he would be the only one to use multiple aliases to say nice things about LTS, so it looked as if more than one poster felt that way. Sadly for him and not surprisingly at all, that wasn’t the case at all! Just one lonely sucker, I mean poster.

• If you took a vote of current Liberty Tax franchisee’s to Remain or Leave Liberty, what do you think the outcome would be?

  I think we all know the answer. Barilla left this site after he bragged about his $200,000 in revenue and it was pointed out to him that he was paying $38,000 for software, tech support, and minimal ad monies given to him. Since his claims were probably bogus, that too would cause his disappearance. He is not missed since he was giving the false impression of success for Liberty franchisee’s.

  Remember, 19% of your revenue back to Liberty Corp. is way too much to pay for what you get in return.

• This franchise has got to go. You have Hewitt screwing the z’s out of monry any way he can. If anybody is dumb enough to buy this franchise now, with all the bad publicity, they deserve it. This was clearly the worst experience of my life. Liberty Tax and Hewitt are the biggest crooks you can meet.

  With a fundamental change in the tax preparation industry, such as better software, stricter regulation and what not, I can’t see how Liberty has the capacity to survive. I agree that because of next year’s later schedule for refunds, cash flow will be an issue not only for the Z’s but for corporate as well. You’ll never see Liberty buying out their franchisee’s like Block has. The reason is they know that their business model in unteneble.

• Block started buying out its franchisees at least 15 years ago, maybe more. At the time I thought the reason was that they didn’t like the idea of sharing any money with the zees. Corporate did offer a lot of support, so the zees got what they paid for. I haven’t looked at Block’s annual reports for a few years, but back then it always struck me that the franchised stores had better growth and client retention rates than the corporate-owned stores. I thought that was because the franchisees didn’t have to follow corporate’s micromanagement rules (cut staff hours, cut receptionist hours, sell this, sell that, institute peak pricing, etc.). The franchisees were allowed to serve their clients as best they saw fit and were more profitable than the company stores because of it. Corporate wanted those profits and started buying out zees. Then they micromanaged and those high profits took a dive. Is there a lesson here?

  Liberty, on the other hand, micromanages its franchisees to the point where they can’t make a profit. (Free returns, mandatory pricing structures, and you have to train staff but you’re on your own when it comes to curricula.) Block had a proven system but allowed flexibility. Liberty blames anyone who fails for not following a rigid system that simply doesn’t work in all markets.

• SaraEA – you hit the nail on the head – Micromanaging and having a rigid system, not letting people adjust on a moment’s notice to serve their current market.

  H&R in my area is going to blow this year. They did the same thing as you mentioned above, by cutting hours and no one in this area could accumulate over time which a lot of tax preparers justify working this field due to the short term of the season and having over time and a potential bonus is worth the stress.

  I am beefing up incase I get more of the market share in my area. Hopefully some real nice people, which most from Block have been very professional and nice. Easy to work with and are thankful for someone with experience.

• Block has a major purchase program going on. They have a big mailing to mom and pops. The mailer is offering info on selling to Block. We received a mailer at each of our locations. Looks like they are going back to basics.

• If they (H&R) don’t buy up the mom and pop’s they will loose more business to them, because they have to control the pricing and market in order to survive the changes in the tax preparation industry.

  If they don’t have the upper hand on their market, they won’t make it after several years from now.

  In those mailers, is there a non compete clause for not doing taxes for the next two years? With the H & R in my area cannot do taxes for the next 2 years anywhere in the USA, nor even do their own taxes. There is no mileage test anymore.

  With that information, that is why they are trying to buy up as many people as possible to lower the competition with the new regulations.

  LTS is just trying to hang on and make it another season. I don’t see the big 3 doing well in the fore seeable future. They are doing bulk returns, where CPA’s, EA and small independents are doing more personalize services and consulting services. Not just filling in a box but actually helping people understand the tax code and helping people build their wealth.

• H&R never liked overtime. It was not permitted except once in a while during first or last peak. Franchizee, I think your friends steered you wrong (or the pay system at HRB is so complex even those who work there don’t understand it).

  I also think they are wrong about the noncompete for two years. Block used to have that clause and it was declared void by CA courts and then voided throughout the country. The reason is that if someone is prohibited from working in their career, they have to be paid for the lost income. A sole proprietor who sells to Block might have such a noncompete because s/he is being paid for their business. A preparer, on the other hand, would have to get compensated for agreeing not to prepare taxes anymore.

  You have an interesting observation, though, that the company is trying to buy Mom & Pops so they can control market pricing. Competition does lower prices (but why do all the chains charge so dang much for EITC returns?). Our prices were lower for almost all of the HRB clients who came into our office. We don’t accept new EITC returns, so I’m talking about folks with Sch A, maybe Sch D, or a rental property–regular middle-class type returns. If Block were to buy our company, which they have tried, I guess most of those people and our long-time clients like them would see price increases. Most of our clientele, though, have businesses, partnerships, complex financial lives. I can’t imagine what their costs would be using the HRB per-form pricing, but I will say our work is not cheap. Most of these folks pay close to $1k (some considerably more) for their personal tax returns; the business returns are even more.

  Perhaps Block is pushing to buy local tax prep companies because they finally see the light. They used to be “America’s tax preparer” but then got sidelined into pursuing the easy-money EITC clients. Now that those clients have other much cheaper choices, Block is trying to return to its roots but wrecked its reputation so much it can’t do so organically so has to buy companies that do business the way Block used to do. Notice they are not offering to buy out Liberty franchisees? Perhaps that is the model they are trying to get away from.

• Well this non compete started last tax season when a franchise was purchased from Corporate. I have heard it more than once from other tax preparer. They are working on trying to get a class action against H&R Block. In my state, the non compete can stand up in court up to 1 year. After one year, then the clause is not enforceable. The people signed the form prior to be able to be interviewed. This particular location was owned as a franchise and they paid overtime, but corporate does not allow anyone to be over 30 hours a week and never any overtime. Plus they have a number of tax returns that must be completed in order to keep their position. This is all in the new contract with corporate H & R Block in my area.

  I believe my client because franchise business and “captive insurance agency’s” are all going to non compete clauses. They are putting mileage test and not touching current clients up to 1 year or 2 years.

  Like you stated, your clients are much more complicated than the average independent and H&R Block. Most of your clients I would not touch because they need more accounting work than I would as an independent would want to venture out. I refer people to my CPA monthly for more complicated tax returns.

• Block is on a buying spree they want any independent they can get along with buying back franchise locations hearing this from many parts of the country.

• They won’t be able to switch the mom and pop s to blocks pricing right away. The motive has to be growing the return count and client base. Market saturated so it makes sense.

• So I’m still reading through the old posts. What I’m seeing – from both sides of the debate – is that you CAN make a modest profit with Liberty but only if you DON’T follow the Liberty system. (which is somewhat ironic, in my opinion)

  To summarize so that not everyone has to read through 5,000 posts: Most of the legitimate pro-Liberty people said something to the effect of “use common sense, cut expenses to the bone, and don’t do the marketing they recommend.” This advice would also be the same I would give to any business starting out.

  So, I’m more convinced than ever that Liberty is a very bad deal. Which is funny to me because my first experience with them – unlike most of the people here – was very good. The owners of the store I worked at were very good and, as an employee, I didn’t have to feel the pinch of the 19% off the top like they did.

  In fact, if you’d like to hire me for $40,000 up front and 19% of gross sales, I’d be happy to consult on your new tax service. I guarantee you better service than Liberty.

• Looks like LTS got snubbed by the IRS this year with them getting so much enforcement action against them. http://www.accountingtoday.com/news/tax-practice/irs-plans-to-set-security-standards-for-tax-preparers-78535-1.html?zkPrintable=1&nopagination=1

• Liberty is on the road to being non-existent.

  Anybody that partners with them will lose now and in the future. Their reputation is tarnished. They will squeeze what they can out of those too deeply invested in their territories.

• I’m not sure Liberty was snubbed. Perhaps the reporter only had so much space for the report so focused on the big guys. I think Liberty is a member of the alliance, so they were likely in attendance, just not fawned over by the press.

  The discussion about Block trying to buy up independents made me wonder if they are also trying to buy Liberty franchise stores. While that may seem counterproductive because Liberty set up its stores as close as possible to busy HRB locations, Block might want those stores just for the clients–they would surely close the Liberty stores two door away from an existing Block. I have seen a big supermarket chain buy up a little supermarket and move in even though the place was 1/4 the size of their typical locations just so no other other grocer moved in while they built a megastore nearby. I also saw Walmart buy the building of a dept store that went out of business even though it was tiny compared to other Walmarts–they just didn’t want a competitor in that space. If Block is trying to buy out the competition, have they approached any Liberty franchisees?

  Next question is whether Liberty corporate would allow the sale. From what I gather from this board, they have to approve all purchasers, and almost none of them pass. Anyone here approached by a straw buyer?

• It’s early here, but I wanted to be the 5,000th poster, yay! Yikes, 5,000 unhappy posts. If that doesn’t send a message to future franchisees, I don’t know what would.

  Out here Block rents in strip malls and then forbids any other tax company to rent in the same mall. Smart. LTS is nearby but on the outskirts.

  Good article T.E.A. linked, thank you. If those summits are including LTS, then they are not going after the grandfather of Tax, himself, the biggest offender of them all.
  It’s really about time that the preparers get regulated. That should have happened long ago. There are way too many quacks that go through the “free classes” and all of a sudden are qualified to do returns, I think not. They should have exams like so many other professions.

  What are the predictions for next tax season? What happened to Bill? And NC Hillbilly? And Greg? Great posters. And Mike too!! :)