For Jackson Hewitt, there's no season like tax season. The tax preparer, ranked #2 in the US behind H&R Block, prepares tax returns for primarily low- and middle-income customers. Jackson Hewitt provides full-service individual federal and state income tax preparation through more than 6,500 primarily franchised offices, including 2,800 locations within Wal-Mart Stores and mall kiosks. The firm's tax preparers, which use its proprietary ProFiler decision-tree software, filed more than 2 million tax returns in the fiscal year ended April 2010. Beset by heavy debt that followed aggressive expansion, Jackson Hewitt filed for Chapter 11 bankruptcy protection in 2011, but emerged later that year.
Jackson Hewitt emerged as a private company under the control of its lenders, including Bayside Capital. The recession proved to be a challenging time for Jackson Hewitt, which saw profits decline between 2008 and 2010, mostly due to reduced business. Jackson Hewitt prepared about 12% fewer tax returns in 2009 vs. 2008. Even fewer were prepared in 2010. Starting with the 2011 tax season, the company is reporting growth in prepared tax returns for the first time in five years.
The company earns some 95% of its revenues during the tax season of January through April. Other Jackson Hewitt products and services include electronic filing, refund-anticipation loans, and Visa stored-value cards. Some 70 million taxpayers rely on paid tax preparers like Jackson Hewitt to help them fill out their returns each year. Looking to entice new tax preparers to enter the field as demand for the skill continues to grow, the company in mid-2012 launched its Jackson Hewitt Tax Schools nationwide in ancitipation of the 2013 tax season. Its education curriculum is intended for those who are new to tax preparation or who are experienced tax professionals with ongoing training requirements or are preparing for the IRS Registered Tax Return Prepare test. To the company's benefit, under new IRS regulations, all tax preparers are required to pass the new Registered Tax Return Preparer Competency Test by the end of 2013.
Jackson Hewitt has been busy in recent years restructuring its operations and cutting costs. As part of this effort, the company reduced its workforce by 15% and shuttered some 300 underperforming stores (before it filed for bankruptcy). Since emerging from bankruptcy, Jackson Hewitt has shifted its focus to growing its business and attracting customers by adding services and new office locations. The company has also increased its presence in Wal-Mart stores by about 40% as it works to partner more with the ubiquitous retailer. Having added online tax preparation in 2010 to its menu of services, Jackson Hewitt is far behind top competitor H&R Block, which has an approximately 15% share of the tax return preparation market compared to Jackson Hewitt's 4% share.
Founded in 1982 by John Hewitt (who later went on to create Liberty Tax Service), Jackson Hewitt became a subsidiary of Avis Budget Group (formerly Cendant) in 1998 and went public in 2004. In 2009 Hewitt, through Liberty Tax Service, acquired 9% of his namesake firm in a move towards merging the two companies. A year later Hewitt began selling off his stake in Jackson Hewitt and began pursuing a merger deal with H&R Block. – less