Death, Taxes and H&R Block

CFO Frank Cotroneo thinks tax preparation could be the next hot employee benefit.

Block’s Byers disagrees, saying that companies are looking to meet the needs of individuals who have more complex tax returns as well as to “package a range of products and services.”

This is why Block has spent the past year or two adding more products to its lineup. In 1999, the company acquired the consulting practices of McGladrey and Pullen, at that time the seventh largest U.S. accounting and consulting firm, with 70 offices nationwide. It also bought Olde Financial, the parent of Olde Discount Corp., the fourth biggest U.S. discount brokerage at the time of the acquisition.

Byers says these two acquisitions boost Block’s ability to offer the wide range of services it’s touting: mortgage help, discount brokerage aid and financial planning.

And these services could generate revenue and income year-round rather than just during the annual spring tax season. If these services become popular, Block could finally better smoothe out its quarterly results.

Visions of Big Brother

Might the sight of employer- sponsored tax preparers lurking around workplaces prompt complaints by employees that Big Brother is peeking over their shoulders? Byers says that’s not a problem, since the services would be delivered offsite. “Employees are not comfortable providing their financial information in their work environment,” Byers acknowledges.

While the tax-preparation benefit could produce efficiencies if employee returns are checked against employer records, and vice-versa, Block is legally barred from releasing information supplied by taxpayer clients—as well as that provided by financial-services clients, he says. In a move separate from the benefits effort, however, Block is looking at ways to download W-2 tax form information from employers, according to Byers.

How will employers pay for the benefit? Various deals could be worked out, the marketing executive says. They include subsidized plans, in which the employer pays 80% and the employee 20%, and “even a possibility of no pay for some employers,” says Byers.

Block might consider delivering tax preparation services for free if it thought it could use them as a door opener to obtain the more lucrative financial-services business with the employee-client, he suggests.

Some employers, he says, might fit the benefit into a “life-cycle account.” In such a plan, an employer might place $10,000 of after-tax money in the account for the employee to spend during the course of his or her career on such benefits as mortgage assistance, legal fees, weight-reduction classes and fitness equipment, according to The Segal Cos.’ Federico. While employees could draw on the account at any time during their careers, there would be yearly spending limits, and the benefit wouldn’t be portable.

Adds Federico: “I think tax preparation fits into that nicely because it’s something [an employee] might do on an annual basis.”


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