As the summer season reaches its peak, rest assured, Uncle Sam is spending our hard-earned tax dollars on his exotic vacation getaway. Okay, not really. In fact, the work of the tax man never ends—which could mean a hefty profit for distributors who add tax forms to their product lines.
Even before the current year’s April tax return deadline, manufacturers are occupied working on preliminary materials for the following season. Typically in March, different formats undergo a test run. New catalogs and brochures are also designed at this time for distribution in July. Neville Johnson, vice president of Houston-based Apex Business Systems, noted, “It is said that the early bird catches the worm. This is true with tax forms. The earlier the distributor gets to his or her potential customer, the better chance [he or she has] to lock in a sale.”
For the sales-savvy distributor, tax forms are an easy sale almost guaranteeing repeat business. Johnson said that because this is a seasonal product end-users need, customers are prone to pay the market price without too much objection. Furthermore, distributors’ sales can benefit when the Internal Revenue Service (IRS) issues a major change to a pre-existing form. Johnson believes this year is particularly exciting for distributors because the IRS has changed the W-2 form, consequently forcing users of the IRS official format to re-program. In years past, the Social Security number position occupied Box D. Now, it will appear in Box A. The change, Johnson told Print Professional, places the social security number in a spot where it is not visible through the window of an envelope. Distributors can take advantage of this change by making cold calls to potential clients, performing follow-up calls on regular customers and picking up new orders because nobody is locked into a specific format, he added.
Nevertheless, distributors can still capitalize on the old mainstays of the tax form market. Forms such as 1099, 1098 and 5498 are utilized by financial institutions, mortgage companies and holders of IRAs. Said Johnson, “Wherever money is made, the federal government creates a 1099 for the payment of taxes. There is, therefore, a number of these depicted in our tax catalog. They are available in different formats including lasers, continuous, mailers and pressure seal.”
Headquartered in Roanoke, Va., InfoSeal has found success with pressure seal forms. “[Our company] believes that the biggest innovation in tax forms is pressure seal forms. We can supply the tax forms and the pressure seal folder in a quick sale solution to meet year-end tax forms needs. [We] produce all of the pressure seal tax forms we sell, which offers the resellers lower costs, [thus] increas[ing] their profits,” stated David Yost, general manager. It is important for distributors to understand that they are not locked into a particular model—the options are endless for tax forms.
Oftentimes, distributors view such options as overwhelming. However, tax forms essentially sell themselves. Inexperienced distributors tend to frighten easily when confronted with the plethora of existing state tax laws. They fail to realize that it is unnecessary to be well-versed in these laws. Their potential customers know what they need and want based on past experience. InfoSeal manufactures forms that are compatible with the current year’s government-approved copy, according to Yost. And Johnson reassured distributors that if they find themselves in a situation requiring clarification, a call to the manufacturing plant will suffice.
What distributors need to focus on instead, is where to sell tax forms. “The great value of this sector is that there is business all around distributor[s]. They should start with their existing customers. They already have a rapport with those customers, and they are buying tax forms from someone else. [The distributors] must ask for the business,” Johnson instructed.
Paper Cuts
In recent years, e-filing has exploded onto the scene. A simple search on Google results in several online services. Apparently, the masses are catching on because the IRS reported as of May 2007, 60 percent of 77 million tax returns were filed electronically, and almost 55 million returns were filed by tax professionals. Many argue e-filing has benefits lacking in traditional paper-based forms. For instance, within 48 hours of e-filing, the IRS sends an acknowledgment of receipt to the user, providing tangible proof of return should something get lost in cyberspace. In addition, e-filing guarantees security and convenience.
Numerous states, including Calif., W. Va., Mich., Minn., Utah, Wis., Okla., R.I., Conn., Ala., Mass., N.J., N.Y. and Va., have already mandated 1040 e-file. This leads some to question whether or not the electronic age indicates a gray future for the paper traditionalists. When asked about the state of traditional tax forms, Yost responded: “We have not seen e-filing directly affect existing sales, but this is a concern. There are numerous legal regulations that may prove difficult for end-users to comply with. Therefore, paper-based tax forms will remain a viable product.”
Johnson explained that many tax form orders are small. Employers are required to file taxes with traditional tax forms if their business contains up to 249 employees. E-filing is used when businesses employ 250 or more workers. However, Johnson said, the employer must still provide employees with copies of these forms in a paper format. “The sale of the federal copies is reduced, but the employees’ copies and employers’ file copy remain high. This has given rise to the sale of pressure seal formats. This product commands a higher price than lasers, and is a welcomed pick up for the lost sale on high-volume federal copy,” he stated.
Nothing is forever and the market will inevitably change. When that happens, distributors will adapt to the trends. Until then, they can begin with paper-based forms and find happy business returns.
- Companies:
- Apex Business Systems
- InfoSeal