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Intuit Tosses Line to the Befuddled

INTUIT INC.

CEO: Brad Smith.

Revenue: $3.85 billion in fiscal 2011; $3.45 billion in fiscal 2010.

Net income: $634 million in fiscal 2011; $574 million in fiscal 2010.

No. of local employees: 1,200.

Headquarters: Mountain View; TurboTax in Carmel Valley.

Year founded: 1983. TurboTax predecessor, ChipSoft, in 1986.

Stock symbol and exchange: INTU on Nasdaq.

Key factors for success: Ease of use, accuracy in preparation; continuous and heavy investment into code revisions and hiring network of experts to assist customers.

The folks at TurboTax, the tax preparation software division of Intuit Inc., are constantly refining their products, reacting as they must to the changes to federal and state tax laws.

This year, in a move aimed at capturing more market share, the company rolled out a free tax expert service that it hopes will convince more befuddled taxpayers to use their products.

The customers TurboTax is aiming at are those who get their taxes done by qualified tax preparers, either through one of the well-known brands such as H&R Block Inc. or Jackson Hewitt Tax Service Inc., or the many small preparation businesses.

These are payers whose forms aren’t that complex but are paying more for personalized service because they’re worried about making a mistake, and aren’t confident about using software programs, said TurboTax spokeswoman Ashley Kirkendall.

“Having access to our experts will help them get over their confidence barrier,” Kirkendall said. “They just wanted a safety net so if they do have a question, they can pick up a phone and call someone and get an answer.”

The company had offered the expert advice previously but charged $29.95 for the first 20 minutes. Since the new service was rolled out this year, the company’s 700 accountants, tax agents and tax attorneys have received hundreds of questions, said John Vorderbruegge, a veteran TurboTax expert and certified public accountant.

“The numbers are growing each day … and we’re taking calls from all 50 states,” he said.

Facing Life Changing Events

The main drivers of questions are life changing events such as divorce or death in the family, first time taxpayers, and receiving a notice from the Internal Revenue Service, Vorderbruegge said.

Though Intuit doesn’t reveal how many new customers it’s attracted through its expert lineup, TurboTax is already the established leader in tax preparation software. Last year, it said more than 24 million customers used its products, which break down tax forms’ arcane language to easier to understand questions.

Tax preparation software has been making inroads in recent years, but the majority of citizens still use individual preparers, Kirkendall said, citing IRS data that estimated 60 percent do so.

Of the 40 percent who do their own taxes, only 8 million to 10 million really do it themselves; the remaining 50 million or so use purchased software or access software programs via online sites, she said.

TurboTax’s sales of $1.3 billion in the 2011 fiscal year were up 13 percent over the prior year, and made up about a third of Intuit’s total revenue of $3.85 billion. The Mountain View-based firm said it expects the division to grow by 10 percent to 13 percent in the fiscal year that ends July 31.

Lining Up the Experts

Mark Notarainni, vice president for customer care for Intuit’s consumer group, said setting up TurboTax’s expert network wasn’t too difficult given the power and attractiveness of the company’s brand name. Early surveys of customers have been overwhelmingly positive. The average question takes an expert 15 to 20 minutes to answer, with the majority of customers being new to using TurboTax, he said.

H&R Block, the nation’s largest tax service provider with nearly 11,000 offices and a network of about 100,000 professionals, also offers a range of services for customers through the same channels that TurboTax has: desktop software, online, and this year, through mobile devices.

And the Kansas City, Mo., company also provides a variety of expert services that can be accessed via live chat, email, or through the phone. The company said it prepared a total of 24.5 million tax returns last year, including those for people in Canada and Australia. The U.S. figure was 21.4 million. Block’s revenue dipped a bit last year, coming in at $3.77 billion, down from $3.8 billion in 2010.

Shaunda Parks, Block spokeswoman, said part of that decline came from higher numbers of the unemployed deciding not to file.

Jackson Hewitt, a New Jersey-based tax service that handled about 2.6 million returns last year, emphasizes that no matter how good a software program is, there’s no substitute for getting one’s taxes done through a personal preparer who can talk more freely with customers.

“We believe in the individual preparation model,” said Mark Steber, Hewitt’s chief tax officer. “You can do it yourself (through software) but by taking a shortcut and overlooking some deductions, you could be leaving a lot of money on the table.”

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