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Happy Tax acquires Opportunity Tax and Insurance

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Happy Tax has acquired Opportunity Tax and Insurance, a franchise network of eight storefront tax preparation and insurance sales offices in North Carolina, Georgia and Florida, and announced a partnership Monday with Santa Barbara Tax Products Group, a subsidiary of Green Dot, to provide refund advances and refund transfers.

Financial terms of the Opportunity Tax deal were not disclosed, nor were revenue figures at the various firms. Happy Tax CEO Mario Costanz told Accounting Today his tax prep franchising company does not release its revenue publicly, but said the firm grew its revenue more than tenfold year over year from 2016 to 2017, excluding discontinued operations. “We also grew our franchise and area representative count from 29 to 106 and brought on over 500 new independent contractors,” he added.

Happy Tax plans to operate its brand separately from Opportunity Tax and Insurance, and will work with independent tax business owners across the country to convert them to Opportunity’s brand. Happy Tax aims to convert between 50 and 100 retail tax offices this fiscal year to the brand. Franchises who convert their tax businesses to Opportunity Tax and Insurance will be able to offer insurance services, use the Happy Tax network of CPAs to prepare returns for independent contractors, and also become Happy Tax area representatives. Happy Tax plans to waive Opportunity Tax’s $25,000 franchise fee and Happy Tax’s $20,000 franchise fee for tax businesses that have completed more than 300 paid tax returns in the past year.

Under the new partnership with Santa Barbara Tax Products Group, the group will provide all refund transfer and refund advance products for Happy Tax and Opportunity Tax. It will also be extending its PreSeason Funds program directly to convert to Opportunity Tax, with dual underwriting provided by Tax Products Group and Happy Tax. TPG is part of Green Dot, a publicly traded company that specializes in reloadable prepaid debit cards, including cards that can be used to receive tax refunds from the Internal Revenue Service for people who lack bank accounts.

“We’re excited to work with Happy Tax and Opportunity Tax and Insurance to provide industry-leading products to help their franchisees grow their businesses.” said TPG CEO Brian Schmidt in a statement.

Both deals present some risks, however. Green Dot acquired Santa Barbara Tax Products Group in 2014 after Santa Barbara Bank & Trust sold its tax products division in 2010, when it was forced to exit the refund anticipation loan business. The IRS said in 2010 it would stop providing a debt indicator to RAL providers that helped them assess the creditworthiness of taxpayers who received the loans. The loans were frequently criticized by consumer advocates as being marketed at excessively high interest rates, frequently targeting low-income taxpayers who heavily relied on their tax refund checks every year to pay their bills. The use of prepaid debit cards for tax refunds has also come under increased scrutiny since the cards have been employed in the past by identity theft rings to steal tax refunds from legitimate taxpayers, as the cards are difficult for law enforcement to trace. Green Dot has been working with the IRS as one of its Security Summit partners in recent years to put more safeguards in place.

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