Thursday, July 23, 2009

The big chains WANT to be regulated

Apparently, the big tax prep franchise chains WANT to be regulated.

The stock markets also apparently believe regulation will increase profits for the big chains. They're putting their money where their mouths are.

H&R Block (stock symbol HRB) and Jackson Hewitt (JTX) are the "big players" in the commercial tax preparation business. Both companies voiced strong support when the IRS announced in early June that it was investigating ways to regulate all paid tax preparers.

The stock market certainly thinks that Block and Hewitt stand to gain from the IRS move to regulate paid preparers. Block stock rose 19% in June, while Jackson Hewitt rose 58%, even though the overall stock market was largely unchanged in June. The effect for Hewitt was especially marked, with a huge spike in price and volume immediately following the IRS announcement.

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