If the ubiquitous “Get Your Billion Back” ads aren’t enough to remind you it’s tax time, the sight of H&R Block (HRB) Chief Executive Officer William Cobb in a bright green bow tie ought to do it. It’s high season for the country’s largest tax services provider, so Cobb doesn’t mind sporting the corporate color around his neck to attract new business. This year he has the added appeal of Obamacare. While the Affordable Care Act won’t affect people’s tax bills for the current filing season, what they do or don’t buy now will affect what they owe next year. Some will be eligible for a credit; those who aren’t insured by March 31 will face a penalty.
For Cobb, confusion over Obamacare could be just the thing to get more people paying for tax prep. “There’s no question it’s a disruptive event,” he says. The challenge is turning that disruption into new business for the Kansas City (Mo.)-based company. About 60 percent of Americans pay someone to prepare their taxes. The rest do it themselves. That ratio has remained constant over the past decade, although online filing has boosted the popularity of H&R Block’s software. That’s meant messy battles over market share more than growth from converting self-filers into tax prep clients.
Cobb hopes that the specter of health insurance penalties and unclaimed tax credits will change that equation. Under the new law, anyone who can afford health coverage and chooses not to get it could face penalties of up to $95 in 2014 and $695 a year later. Those fees will be paid through federal tax returns. Anyone who qualifies for a subsidy, meanwhile, will be required to file a federal tax return whether they worked the previous year or not. For H&R Block, that means more opportunities to find fresh customers.
H&R Block recently teamed up with Chicago-based online broker GoHealth to help people sign up for health insurance with an online tool curiously named helpth. The company is testing a more hands-on offering in Phoenix by placing health consultants in its tax prep offices to help walk clients through the new law. For people who sign up for its tax prep services anywhere, H&R Block is also offering a free tax and health-care review.
If Obamacare doesn’t inspire new enthusiasm for tax prep services, there’s always H&R Block’s new marketing claim that Americans are leaving $1 billion on the table by doing it themselves. How Cobb’s team arrived at that neat figure is a bit of a mystery, and there’s no mention of how much Americans gain by taking credits they don’t deserve. But the prospect of letting the government pocket that cash, or the fear of having to pay it back after a painful audit, is not new. Obamacare is, and it could prove more potent in getting Americans to hand over their taxes to a pro.
