Reuters reported on September 2 that the IRS is reportedly considering options like competency tests and registration, as well as fees, in an effort to improve the accuracy of paid tax preparers; in several government reports, the paid preparers had high error rates, even doing worse than volunteer preparers. In a letter dated August 31, H&R Block said it backs legislation that would improve training and ethics in the industry. Analysts believe the company could benefit from regulation if smaller competitors that have fewer available resources are unable to comply.
Two big publicly held franchise chains dominate the paid tax prep industry in the country: H&R Block(stock symbol: HRB) and Jackson-Hewitt(JTX).
Those two firms haven't been doing so well lately.
Yesterday, Block held its annual shareholder meeting and its CEO faced the music, explaining the company's 22% drop in its stock price over the past 12 months and its plans to recover and rebuild the company.
Jackson-Hewitt stock, has done even worse, falling about 70% over the past year.
For comparison, during the same period, the overall market, as measured by the S&P fell around 14%.
Both companies have betas around 0.9, which means that they would ordinarily be expected to outperform the market during downturns, not to underperform it.