Every year roughly 150 million Americans give up a few hours of valuable time, and more than a few dollars, to deal with one of life's unavoidables – taxes. At that same time, there is a deluge of media about proposed tax code reform, federal ReadyReturn, and all the countries who “do it better.” But it is dismissed. It is dismissed because the likelihood of any such changes seeing the light of day in the immediate future is slim to none. Fortunately technology has opened the door for a new breed of hyper-lean financial services companies to compete on the basic premise of offering a better, uniquely pro-consumer product experience for less. Companies like CreditKarma, Simple and Robinhood are providing services to consumers for free when those services used to command high price tags. They’re doing so by forgoing the expensive ads on the Big Game and the sunk costs of brick and mortar stores, and capitalizing on their competition’s encumbrance caused by organizational indecision and overwhelming technical debt.
The same can be done for taxes.
Almost 50% of what the IRS considers simple returns are prepared via a tax store or accountant. That means each of these simple taxpayers are paying upwards of $100 to prepare a return that is virtually identical to the rest of the 60% of taxpayers who also take the standard deduction and may tack on one of a handful of common credits. The task of preparing a simple return should not consume hours of time and hundreds of dollars, but due to lack of awareness and a lack of quality alternatives, many Americans are left forking over their hard-earned cash to companies that are fully aware of the stagnant industry landscape and the plight of their captive audience.
But it’s not enough to merely lower the cost to consumers. Hyper-lean services are a response to consumers’ heightened expectations of what software can do to make their lives easier. In the age of Google, Facebook, Amazon, and all the others who seem to know us better than we know ourselves, why should a consumer have to inform their tax preparer of choice whether they’re married, have kids, or own a home? Decades ago, the tax business was revolutionized when it transitioned from forms to interview. It’s now long overdue for another transition – from interview to review.
With the ever-growing availability of data, taxes should be little more than an upload of a W-2, followed by a quick review of the information gathered, and then it’s off to the IRS. It’s time to free consumers from refund loans, refund transfers, and hidden fees designed to extract every penny possible. It’s time to make a person’s data do more for them than generate redundant product offers and introductions to singles in their area. It’s time for the United States taxpayer to benefit from the hyper-lean, pro-consumer model, and at Common Form, that's exactly what we're doing.