Page 20 - VTaxOnDemand Independent Industry Analysis of Accounting Industry

Decline in Financial Results

Government Policy Risks

1.) Government initiatives that modify tax return preparation requirements or expedite
refunds could have an adverse effect on our business and our consolidated financial
position, results of operations, and cash flows.
2.) From time to time, there are various initiatives seeking to modify the preparation and
filing of federal tax returns, including preparation of tax returns directly bythe IRS, and to
provide additional assistance with respect to preparing and filing such tax returns or
expediting refunds. H&R Block is a member of the FFA, which provides the ability for
low-income taxpayers to prepare and file their own federal tax returns online for free.
3.) The IRS has been exploring the Real Time Tax System concept, which would require that
documents (such as W-2s and 1099s) must be on file with the IRS prior to taxpayers
submitting their tax returns. Theobjective of this concept would be to facilitate document
matching such that it would reduce fraud and after-the-fact audits. The implementation of
the Real Time Tax System would provide a foundation for the IRS preparation of tax
returns and make the pre-populated return a more tangible possibility.
4.) The IRS has in the past explored the possibility of allowing taxpayers to allocate a
portion of their tax refunds to pay tax preparation fees, which could reduce the demand

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