Liberty Tax Service Acquires Online Tax Software Company

Business Wire, Jan 8, 2007

Move Aims to Bolster Internet Presence and Increase Customer Retention

VIRGINIA BEACH, Va. -- Liberty Tax Service today announced the acquisition of eSmartTax, the Internet income tax preparation business of San Jose, California-based C&S Technologies. C&S was a provider of Internet income tax preparation and payroll tax related electronic filing services. (Liberty's purchase does not include the payroll tax related filing services.) Liberty Tax Service and H&R Block (NYSE:HRB) are now the only two national tax preparation firms that offer both an online and brick-and-mortar solution.

"With this acquisition we're able to provide an Internet solution for individual tax preparation that is user-friendly, well-supported and affordable," said John T. Hewitt, CEO of Liberty Tax Service.

The eSmartTax acquisition expands Liberty Tax Service's existing product offering by allowing customers to prepare and file individual tax returns on the Internet through the company's website (www.libertytax.com), or through the IRS Free File Alliance site (www.irs.gov/freefilealliance.com).

"Last year, 21.7 million individual U.S. tax returns were filed using the Internet," commented Hewitt. "Online filing is the fastest-growing segment of the tax industry and we want to take advantage of that growth."

Liberty also plans to use the software platform for its participation in the Free File Alliance partnership that provides a free tax preparation alternative through the IRS's website. Since the Free File's debut in 2003, 15.6 million tax returns have been prepared and filed through the program according to the website.

The new online program, to be called Liberty Tax Online, is easy to use and features an IRS forms based application, online help, guaranteed calculations as well as a fully-translated Spanish language version.

The addition of the online tax preparation product compliments the company's brick-and-mortar operations, according to Hewitt, because Liberty can now serve consumers who routinely switch between self-prepared and paid preparation based upon lifestyle changes and/or tax law changes.

"Due in most part to their complexity, well over half of all tax returns started online aren't completed," Hewitt stated. "Our goal is to move those filers who don't finish their online returns into one of our nearby offices," he said.

"We are enthusiastic about the possibilities that the online service will present to our franchisees," Hewitt said. "By having a product offering for each type of consumer - the paid filer and the "do-it-yourselfer" - our customer retention will improve significantly. This is a huge win for Liberty and our franchisees."

About Liberty Tax Service:

Founded in 1997, Liberty Tax Service is the fastest growing retail tax preparation company in the industry's history. Founder and CEO John T. Hewitt has 38 years of tax industry experience, the most of any CEO in the tax preparation business. Hewitt is also the founder of Jackson Hewitt Tax Service (NYSE: JTX).

Liberty Tax Service operates 2,450 offices throughout the United States and Canada, and has prepared over 4,000,000 individual income tax returns. The company focuses on computerized income tax preparation, electronic filing and refund loans. Emphasis on customer service including audit assistance, a money back guarantee and free tax return checking are just a few of the above and beyond features offered by Liberty Tax Service.