Walmart and Jackson Hewitt: Shady business

[VanMeters Revenge]

Walmart executives are advertising that the 2800 Jackson Hewitt franchises in their stores are doing FREE 1040EZ returns. They are stating to news agencies that their customers can come to Walmart and get an "assisted" filing of a 1040EZ. This is not true. This is a bait and switch scam. The vast majority of Married Filing Joint and Single taxpayers who can file a 1040EZ will qualify for the Earned Income Credit without dependents which goes on Line 8a of the 1040EZ. The Jackson Hewitt tax preparers are being told to tell the customers that because they are receiving the Earned Income Credit that they do not qualify for a free 1040EZ filing. The scam is to convince taxpayers that claiming the EIC means they can not file a 1040EZ, and so the much bigger billing of $88 will be applied to filing their 1040EZ form E-filed to the IRS. There are no additional forms required beyond the 1040EZ form to claim the EIC. This seems to be a violation of IRS Due Diligence requirements for paid tax preparers to be honest with taxpayers about what forms are being filed and what the taxpayer's situation really is. This is a scheme to bait people into Walmart on the pretense of a free tax return when that will nearly never happen and Jackson Hewitt knows this. Walmart apparently is happy to make these representations to get customers into their stores to spend those tax refunds. The article also says the fees charged in Walmart for tax preparation are 7 to 10 percent less than at other Jackson Hewitt locations, and that too is not true. The fees for other returns and services are identical whether at Jackson Hewitt in a Walmart or in a Jackson Hewitt storefront. Jackson Hewitt employs "Tiered" pricing on three levels, and it is the same pricing scheme everywhere. Anyone who wishes to pursue a fraud case against Walmart or Jackson Hewitt can easily document these matters. This is great material for a large class action lawsuit.

The article in question:
http://news.yahoo.com/walmarts-free-off ... 48255.html

[Brandybuck]

Upselling is not bait and switch. The 1040EZ service is there, is available, and if a family wishes to forego EIC can still use it. Real bait-and-switch is when there is no intention to sell the advertized product.

[JamesVincent]

Upselling is not bait and switch. The 1040EZ service is there, is available, and if a family wishes to forego EIC can still use it. Real bait-and-switch is when there is no intention to sell the advertized product.

Yeah... and why in the world would you if you qualified for it? And it shouldnt be upselling if it does not require a different form, just another worksheet IIRC. Not even that since its all in their computer anyway. If you offer a product at one price but dont really offer it at that price with a bunch of conditions, or like was said advertise a price break that really isnt a price break, then theres something fishy in Chinatown.

[Number Six]

I have also seen H&R Block set up at their stores in season.

"Liberty Tax", the franchise with the dancing clowns out front are also trying to compete aggressively as a tax service, they even offer to do your taxes for free unless or until you agree to have them finalize the deal. This gives them an incentive to use the accounting method most to the advantage of the taxpayer in dollar terms. With the lower percentage of audits under $200K in income, the IRS probably isn't going to do an audit unless the violation is egregious.

[jkeeb]

I worked a season with Jackson Hewitt after leaving IRS. Whole bunch of new stories. Will never work that side again--and I wasn't asked back.

[VanMeters Revenge]

This was brought to my attention by a disgruntled employee of one of the Hewitt Jackson locations and wanted me to post something about this. When they went to their superiors about this, they were told to pretty much stfu about it.

We all know my personal feelings about the whole taxation issue, but hate seeing people getting duped none the less by false advertisement.

Thanks for letting me post this here.

[Cathulhu]

Anyone who qualified for a simple return (1040EZ, 1040A, 1040 with only Sch A/B) could easily get free tax prep from the IRS Volunteer program (opens beginning of February every year). Which operates out of schools, churches, senior centers, etc. I think that's what you're thinking of, CK.

[LaVidaRoja]

Volunteer Income Tax Assistance (VITA) is a program that provides free tax assistance to people who have income under a particular threshold (and I don't know what that threshold is) I suspect that most people who make under $30,000 a year qualify for this help. They will do both the Federal and the (local) State return for FREE.
The major chains advetrtise their "audit assistnace". NOT! They will accompany you to an audit, but their sole role is to address any questions the IRS raises about how the return was prepared. They cannot represent you before the IRS.

[JamesVincent]

H&R Block Online used to do Federal tax returns and e-file for free if your AGI was less then $35k. Not sure if they still do, been a few years since I used the service. They would not do state returns for free, however. In MD, though, state income tax is based solely on your federal income tax so its basically going to Maryland.gov, to the income tax section and punching in numbers from your federal return and your state return is done for free and e-filed. Of course if you make more then that and wish someone to look at it your better off just reaching in your wallet and finding a good accountant to do it for you.

[Pantherphil]

Wal-Mart hopes that the customer will use this service and take an "instant refund" which will be used to purchase items. Win, win for Wal-Mart. Lose, lose for the customer.
While I agree that most folks ought to be able to do an EZ or Form 1040-A on their own or seek out one of the many volunteer programs in the community, if there are folks who are willing to pay for the privilege who find this service worthwhile, Wal-Mart is simply fulfilling a market demand. If people don't want the service, it won't be provided.

[Burzmali]

Wal-Mart is simply fulfilling a market demand.

So are crack dealers and child pornographers, it doesn't make it any more ethical.

[Cathulhu]

Last time I checked, the income limit for the free VITA help was right around 50k. Anyone interested should call the irs hotline or check their website, which lists sites and hours, or will as of first of February.

[Pantherphil]

Peace, Burzmali. Let's keep the discourse at the appropriate level.
Crack dealing and child pornography are both illegal. There are criminal penalties for these crimes under statutes duly enacted by our legislators.
Preparing a tax return for free is not illegal. Preparing a tax return for a fee is not illegal. There is no comparison.
No one is being forced to obtain tax assistance from Jackson Hewitt at Wal-Mart. Folks are free to prepare their own returns, seek out free volunteer assistance or look for help from the IRS (which does a remarkably good job of providing taxpayers with free information and materials), file using "Turbo tax" or other on line services (all of which provide a file for free teaser and then try to upgrade you to a premium service), go to H & R Block or Liberty Tax or one of the other mass tax return preparers (all of which have seem to have some slight degree of shadiness in refund anticipation loans or hidden fees and charges) or hire their own accountants or tax attorneys.
As I noted in my initial post, Wal-Mart isn't doing this out of the goodness of its heart-- it sees a profit opportunity. Jackson Hewitt isn't preparing the returns out of the goodness of its heart, it sees a profit opportunity. Hopefully, savvy consumers can see through it.

[Burzmali]

Peace, Burzmali. Let's keep the discourse at the appropriate level.

Excuse me if I get a bit wary of the same ol' "that would be scummy behavior, but since people are using it, it must be okay" line that can be used to justify all sort of shady behavior.

[Brandybuck]

Wal-Mart is simply fulfilling a market demand.

So are crack dealers and child pornographers, it doesn't make it any more ethical.

Child pornographers harm children. The kidnap children into slavery. They abuse children. They are the vilest of the vile.

It is disgusting to insinuate that advertising free 1040EZ tax preparation is akin to child pornography. No one is being kidnapped. No one is being raped. No one is being abused. Everything is entirely on the up-and-up, voluntary, with informed consent, eyes wide open, by adults. You misunderstanding of the market is profoundly disturbing.

[Arthur Rubin]

The "instant refund" is a shady business, perhaps a little worse than "payday loan" companies. They advance you the money you would have received by direct deposit less than 2 weeks later, and charge a nominal interest rate and a $39 (last years number) processing fee. If the refund is $100, the effective interest rate would be (around) 1014%. Payday lenders can't charge an effective interest rate of more than about 50%.

[The Observer]

Excuse me if I get a bit wary of the same ol' "that would be scummy behavior, but since people are using it, it must be okay" line that can be used to justify all sort of shady behavior.

But that isn't what people are saying. The practice is legal. Just because it isn't in the best interest of the consumer to participate in the offer doesn't mean that it is "scummy." There are any number of contracts, offers and the like on a daily basis where it is not in my best interest to accept - but there is no provision in the law that contracts must be 50/50 in terms of fairness. While there are provisions in law that contracts cannot be predatory/exploitative in nature, as I understand it, the concept of a "meeting of the minds" still governs the validity of contracts.

In your opinion, anything that Wal-MArt does is "scummy", so I am not suprised you jumped to your baseless comparision with child pornography and crack dealing; if it wasn't for Godwin's Law you would be comparing Wal-Mart with Nazi Germany. It is such comparisons on your part that has caused you to have generated low credibility in regards to your opinions.

As stated earlier, Wal-Mart and Jackson-Hewitt are offering their services in the effort to make a profit. It is up to the consumer to decide if the cost of these services are worth the time and effort the consumer would have to go through if they were to prepare the return themselves or to receive less money up front now is worth more than waiting for a larger refund.

[Arthur Rubin]

It is up to the consumer to decide ... [whether] receive[ing] less money up front now is worth more than waiting for a larger refund.

I actually agree with that. But tax preparers should also be required to state the effective APR. (As an aside, the preparer now does have some risk, as the IRS no longer reports whether there's an intercept on the refund.)

[jkeeb]

When I worked the season at J-H, early in the season I would tell the "clients" that they could go to IRS and have the return completed for free and get the refund in less than two weeks, no one (and I mean NO one) wanted to do that. At JH, the return is priced reasonably, the next day refund is expensive. I would explain the price and time difference (a little over a week average) and probably two out of 500 returns chose to wait.

[Arthur Rubin]

When I worked the season at J-H, early in the season I would tell the "clients" that they could go to IRS and have the return completed for free and get the refund in less than two weeks, no one (and I mean NO one) wanted to do that. At JH, the return is priced reasonably, the next day refund is expensive. I would explain the price and time difference (a little over a week average) and probably two out of 500 returns chose to wait.

As long as the clients are aware of the options (including the payday loans I mentioned earlier)....