Tax Race: H&R Block Vs. Intuit

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Tax season's finale brings a thundershower of cash—and it's Block that cleans up. But Intuit is grabbing the future.

Bob Meighan stayed late in his San Diego office on April 15. Not that Meighan, who runs the consumer tax group at Intuit, had anything particularly pressing to do. The real work was now being done by several hundred servers in Intuit's data centers—servers handling a surge in volume from last-minute tax filers. The previous year's record for concurrent users, 23,700, had already been broken, and the only question left was how high was up. At around 8:30 Meighan's time, the technicians in the monitoring room down the hall from his office noted what would turn out to be the high point for the TurboTax-on-the-Web season: 38,000 concurrent users.

PDF Download Intuit rival H&R Block was enjoying its own great finish to the tax season. But in Block's case, it wasn't computers doing the accounting work; it was people. At hundreds of Block offices around the country, accountants were helping walk-in customers complete their tax returns for an average fee of $121.52. All told, Block accountants appear to have prepared upwards of 250,000 returns on April 15 alone.

Since April 15, both companies have exulted over their results during tax season—Block, if anything, more loudly than Intuit. But to study Intuit and Block is to see two companies approaching the tax preparation business in radically different ways. And though Block may be rolling in more dough for the moment, it's far behind Intuit in creating automated tax services, with their rapid growth and huge profit potential.

Tortoise and the Hare
Culturally, Block and Intuit are a study in contrasts. Block is a 57-year-old company based in the American heartland, whose brand is embodied in its plain-as-the-prairie offices. Intuit is a 19-year-old Silicon Valley survivor with products that work only on a computer—like Quicken (for check-paying) and TurboTax (for tax-preparation).

But both companies are big in the tax business: Tax preparation represented nearly 50% of Intuit's $1.3 billion in sales last year and 57% of Block's $3 billion in revenues. And the two companies now are jostling more directly as a result of Block's move into tax-preparation software and its increasing presence on the Internet. It won't be long before they're trying to take food out of each others' mouths.

This article was originally published on 2002-05-01
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