Are Tax Preparers Who Operate on Volume Doomed?

I’ve written before that I don’t anticipate the tax or accounting profession to disappear. It will change, but I don’t fear being replaced by a computer any time soon.

But if I ran a practice based on volume — preparing thousands of simple tax returns at a cheap price — I would be worried.

The number of self-prepared tax returns is rising, up 6.5% this past season. Returns prepared by tax professionals increased just 0.7%.

Anecdotally, I’ve noticed an “attitude” from more and more people about not wanting to waste money on a preparer when they can just do it themselves.

Technology already exists for people with only a W-2 to take a picture of their W-2, upload it to an app on their phone, and be done with their taxes for the year. (TurboTax and H&R Block have apps that do this; there may be others out there.)

How are the high-volume operators going to survive? I’m not talking about the H&R Blocks of the world. I mean independent operators who prepare thousands of basic tax returns at a cheap price.

I know a preparer who sets his rates based on what TurboTax charges. He sets his rates just above theirs. No, he’s not an unlicensed guy preparing taxes out of his basement — he’s an EA and prepares well over 1,000 (mostly simple) tax returns a year.

How will he survive in this new world where basic tax preparation is a commodity?

I very rarely do tax returns that I would consider “simple,” but if I did, I think I’d be thinking about — and worrying about — how my business would survive.