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Tisbury voters also decided two ballot questions which would have increased town property taxes, decisively rejecting both of them.

The first will be particularly problematic for town officials; it sought $85,000 to fund collective bargaining and contract settlements with employees.

The other questions sought $100,000 to begin putting aside for Tisbury’s currently-unfunded liabilities for post-employment benefits — mainly health insurance costs, for town workers.

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Meet the new working class: seasonal temps paid to gambol like dystopic Care Bears in cheap national monument costumes.

We're not unfamiliar with the entry-level marketing employee—the sandwich-board wearers, the handers-out of pamphlets, the guys who stand in front of the mall propping up the FINAL CLOSE-OUT signs, now or historically. It’s a sad truth that not all jobs are awesome (that’s why they call them ‘jobs’). But these street teams are different. There's no sullen resignation, no tired shuffle. These L'il Statues display the enthusiasm we expect from the Junior Varsity Cheerleading Squad's car-wash fundraiser. They are confounding. Surely they can't be paid enough to be that happy?

These dancing statues are employed by Liberty Tax Service. Liberty Tax Service is a growth industry, a storefront paid tax preparation concern. Think about that: the L'il Statues that are endemic in less-advantaged neighborhoods and newly sketchy suburban business areas are employed, not by a children’s TV show, not by a used car salesman, not by a AAA baseball team, but by a storefront tax preparation concern.

That is something like alarming, but with a dash of sinister and then dumped into a simmering pot of OMG.

***

Liberty Tax Service was founded in 1997 by John Hewitt, who’d been bought out of his previous tax prep concern, Jackson Hewitt. He opened stores in Canada until his non-compete expired in 1999, whereupon he began to open stores in the U.S. as well. Objectively, LTS is a success, already third in the market after roughly a decade in business. According to the most recent available Annual Report (warning: pdf) from 2009, in the past nine years LTS has increased the number of LTS offices by 600%, and revenue by 800%. That is a meteoric rise (if we can imagine a meteor in reverse). Granted the field of storefront tax prep has not had the easiest go of it, competing both with online tax prep software and with whispers of regulation of Rapid Refunds (more on that in a bit), but LTS is now snapping at the heels of big boys H&R Block and the aforementioned Jackson Hewitt, in a very short time.

These are tax services that are aimed at a specific demographic, a customer base that hits the strip malls and walks the high-traffic districts. Let's call the demo mid- to down-market, a call based purely on the locations of LTS. The clients of LTS most likely do not own businesses or have investment portfolios, and they are probably not subject to the alternative minimum tax. Clients like that have a CPA. Accordingly, the rates charged by LTS (and its competitors) are less than the rates charged by, say, a CPA.

Well, we assume so. The fee structure of LTS is a bit of a mystery. It’s tough to say from the
website, which makes no mention. Tougher yet to say if you stop by the actual stores. “What you have to do is you can come in for a free consultation,” a preparer in Manhattan told me. A young man in Brooklyn was more forthcoming. In order to give me a quote, “we would have to put your info in the system.” That’s a sales tactic that’s not without pressure. “Generally, it’s around $150 for the simplest returns,” he added. Assuming a certain canny optimism in that quote, let’s say that the LTS fee structure is comparable to the leading tax prep firms, both of whom report their average fees ($189 and $209). Let’s give the benefit of the doubt.

The services offered by LTS exceed the services of one of the proprietary e-filing services offered by the Internet only inasmuch as the customer interfaces with a human being. It's not tax-planning; it's data entry. So if the customer is in a position where $150 is worth the time the customer would have to spend utilizing one of the e-services, LTS makes a lot of sense. Which to say that unless the customer makes a hundred bucks an hour or so, or has a heightened phobia of filling out a 1040EZ, LTS makes little sense. Though who are we to put a price on convenience? Maybe, for the down-market tax filer, a couple days' worth of wages is not too much to pay for the comfort of, at the very least, perceived expertise.

Tax preparation is not the only service offered by LTS. They also offer Refund Anticipation Loans. The mechanism is that a LTS arranges a loan from a third-party bank equal to the amount of a potential refund. When the refund arrives, the customer then remits the refund to the bank, and the loan is repaid. If that happens, then the fees are nominal, less than $100. However, if the customer somehow fails to hand over the refund in a timely manner, then a crazy-high APR kicks in and the real money is made. RALs are of a kind with payday lenders, rent-to-own centers and pawn shops—they specifically target low-income consumers, which is why regulation of RALs has long been lobbied for (and is slowly easing in). RALs may become a thing of the past—H&R Block had to stop offering them when regulators forbid their bank from funding them—but they remain a cornerstone of LTS’s appeal.

Speaking of which: for a burgeoning tax prep empire, LTS is outwardly, for lack of a kind word, shabby. The storefronts speak very directly to a depressed commercial real estate market—they have a lived-in quality that is out-of-place in the world of bright and shiny franchises. This is to say that LTS occupies, in a quickly and cheaply realized fashion, spaces formerly occupied by businesses—businesses that pulled up stakes. Think banner signage, fading; think institutional office furniture; think beige paint. These are not the trappings of the national chains that we expect: custom-manufactured signage and identifiable architectural flourishes. What LTS shows is evidence of the temporary and the opportunistic, a temporary autonomous zone stood on its head until the change falls out of its pockets.

* * *

The membership of LTS in the sad list of storefront businesses designed to make money from the less well-off is not (exclusively) what makes LTS worth talking about. LTS may appear to be a paid tax-prep service, but more accurately, LTS is a paid tax-prep franchisor. That may seem like a little difference but it’s actually a big one.

A subset of the world of small business, franchising is a business arrangement whereby the franchisee is purchasing the right to conduct business in the name of the franchise. This can be a simple license of the right to use the tradename and associated intellectual property of the franchise, or it can be a very complex relationship with ongoing support and involvement of the franchise. Think for example of the fast-food industry: the chances are good that your local Burger King is not owned and operated by Burger King Corporation but rather by an independent franchisee. “Independent” can be misleading—the consistency and sameness of all the franchised BKs is tightly controlled by the corporate parent, by the training systems in place for new franchise operators, by corporate control of the supply and marketing of the individual BK, and mostly by the franchising agreement, which stipulates not only what not to do, but what must absolutely be done.

On a scale that runs from simple IP license to total control, as a franchiser LTS falls somewhere in the middle. LTS offers use of their proprietary tax prep software and training for owners and preparers (“certification," they call it). LTS also mandates certain advertising and marketing, though they do not control it as tightly as, say, Burger King. In the world of franchising, in the websites and magazines and message boards devoted to it (franchisees, or “Zees,” are not unlike fanboys in this regard), LTS is thought of as a good opportunity for the beginner Zee. It's said to have a focus on expansion and reasonable start-up costs (in-house financing available). On the other hand, financing comes with a typical APR of 12%, and LTS has a reputation as a strict enforcer of the franchise agreement when a Zee missteps.

LTS also offers an additional option to the Zee: becoming an “area developer,” the person responsible for gathering Zees in a specific region. So it’s not just a franchise but a franchise with an additional layer to it. The middle layer, the area developer, acts as a sub-franchiser, while kicking back start-up fees and royalties to the top layer. This is a feature most often associated with Multi-Level Marketing (think Amway). Here LTS creates an engine that self-replicates, provides the tax-prep software and the training, and then collects money. And it’s an engine designed to appeal to the self-reliance of those that have been left behind (or those for whom opportunity has not yet knocked).

Do note that the literature of LTS devotes a great number of words and pictures to excellence of service and similar virtues, and that Hewitt is personally a pioneer in the development of tax-preparation software. But voracious growth and MLM structuring are warning signs to the savvy Zee, and LTS is very direct about recruiting potential Zees—visiting their website (say, looking into their services and unseen fee schedule), and the visitor can’t help but notice, right there on the main page, a series of entreaties to Become A Franchisee!

Franchise fees, royalties and advertising fees from Zees make up a half of LTS’s revenue. Services offered customers represent less than a third of revenue. Note that “royalties” would actually cover services offered to customers by Zees, but the line item covering royalty income is actually commingled with the advertising fee income, which is why trying to read a financial statement can be as troublesome as reading a statistic. The point is that LTS is, profit-wise, more in the business of franchising than they are in the business of tax preparation. They are selling opportunity, or at least the illusion thereof.

* * *

But what of the L’il Statues that first attracted our attention? They're not relatives of the Zee, lending a hand. They're actually part of the marketing efforts mandated by the franchise agreement. They're also, these emblems, a point of pride for LTS. What follows is from LTS’s promotional materials aimed at potential Zees:

Our approach to marketing is proof [of their leadership in maximizing community awareness]. During tax season (and beyond), we have thousands of individuals across the United States and Canada dress up in Statue of Liberty costumes and act as live advertisements for Liberty Tax. This form of outrageous marketing is paramount to the success of the Liberty Tax Service offices. We host roadside parties and give away hotdogs, coffee, popcorn and even sno-cones! We pull out all the stops to attract customers to our stores and to help our community.

There is a certain mandatory upbeat tone and invocations of community-helping in these sort of materials, but what it boils down to is that a big reason that the potential Zee should go with LTS is that the Zee will have to hire a team of low-wage employees to dress in funny costumes, wave at cars and generally dance around, perhaps like fools, perhaps like people who like to dance.

Let me admit to a certain squeamishness in highlighting some of the practices of LTS. Even the distasteful enterprises help some—the Zees, who save up and pay out so they can capture a small slice of the American Dream, the employees, who are employed, and even the customers who received legitimate tax services. This is not necessarily a process that dirties everyone touched by it.

But what is dirtied by the process is all of us. This is a case of the Kinda-Better-Off being encouraged to take advantage of a business opportunity that really only enriches the Actually-Well-Off. Customers spend their $150 or so, the modest entrepreneurs spend their franchise fee and royalties, while LTS has no skin in the game other than its good name. In fact, LTS is a capitalist hero for devising a scheme that shoehorns the money of both the boot-strappers and the actually-poor into the corporate coffers.

What LTS is is an ingenious mash-up of the down-market and the exponential growth franchise, a mirror that is not particularly fun to hold up. The overall business plan of LTS is shrewd. What it says about the ways that business can exploit the underclass is an embarrassment. It’s a brand that has fetishized the Statue of Liberty as if it has a single or even a portion of a single thing to do with liberty or patriotism or even the United States. LTS and its success is predicated on this condescension: that hot dogs and L’il Statues will fill the Zee’s stores with customers, that the targeted demographic is so unsophisticated that they can, like children, be lured in with candy.

Brent Cox is all over the Internet.

Top photo by JJD2500 via Flickr.

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So you, yes you, can do your taxes this year: leisurely even! Many of you are done, most of you haven't started, and a few of you are freaking out. Some of you are thinking: what if I just don't file? What will happen if I don't pay? What if I didn't file last year or the year before that? What will they do to me and will I be in prison with Wesley Snipes?

I have some answers to those questions! You should note that I am not a tax professional, that this is definitely not professional advice and that every situation is unique. Also you should be doing your taxes right now probably, not reading the Internet. But here's some experience, offered person-to-person, that is not professional counsel.

It is better to do a cruddy job and file than to not file.
When I say "cruddy job," I don't mean "making wild guesstimations" or being dishonest. I mean: If you can't nail some stuff down, forget about it and move on. For instance: Do you not have receipts for some expenses? Big deal: cut them out and forget about it. (These small expense-deductions don't generally have too much effect on your tax burden anyway.) Err on the side of "hurting" yourself and just plow through it. It's just not worth making yourself crazy over fifteen bucks!

You can fix your return!
It is easy to amend a return. It's also easy for the IRS to amend your return: "You do not need to file an amended return due to math errors. The IRS will automatically make that correction." Intense, right?

It is better to file and not pay than to not file and not pay.
What happened, you spend all your money? That's okay, pal! Do your taxes, send 'em in, if you have absolutely no money. You will incur not-totally-crazy penalties over time due to not paying, and they will want to talk to you about when you can pay. (Yup, it's always the broke people that have to pay more in this world.) That's not ideal, sure! But it's a lot more ideal than not having filed.

Okay, but should I be scared of the IRS?
The IRS only wants to hear from you. The answer, surprisingly, is a very firm "no"! Not at all! The IRS has some of the nicest, most understanding people I have ever spoken with in my life. True fact.

There's a lot of TV- and movie-propagated terror about the IRS. (As well, the whole idea of the government and money is anxiety-producing on its own, sure.) And the truth is... well, they kind of used to be a little mean? But that's actually ancient history. The people at the IRS are some of the funnest people ever! I have had long hilarious conversations with them on the phone. (For real, there are some hilarious ladies down in Atlanta.) IRS employees are like most civil servants; they deal with confused, freaked out and sometimes very dingbatty people (not you, friend!) every day—the kind of people who do not follow directions, particularly. So if you are not a jerk, they will be delighted to speak to you, at length. They will sometimes be like, "Girl, how did you get into this trouble?" and you'll be like "Oh, haha, I'm a mess! Mistakes happen!" and they'll be like, "I hear you! I get it!" Do not be afraid. What they want is to hear from you.

Should I be scared of my state tax department?
Actually... well, maybe just a little. The same rules apply as above—they do want to hear from you!—but, for instance, the New York State Department of Taxation and Finance seems to be a little cranky. They want their money, they want it now, and if you don't give it to them, they will take it. I'm sure there are some wonderful, caring people working in all of America's fine state tax departments!

What happens if you don't file?
Have I mentioned that the IRS only wants to hear from you?

No really, what happens if you don't file and don't pay?
Great news! Eventually the IRS will do your taxes for you. This is called a substitute return. Doesn't that sound nice? Well it's not particularly. For an agency that's devoted to taxes, they don't do a very good job at it. (Kidding.) So the good news is that your taxes will be done! The bad news is that they will take your reported income, slot it into the appropriate tax bracket, and say you owe that percentage. So if you made $85,000, bam, you owe 28%.

Also? Lots of people can't deal with taxes when they're even going to get money back! People are funny. But you should know that your refund disappears in three years if you don't file.

What happens if, like, I ignore the IRS?
Well, you'll get a ton of mail. And the problem with being "in trouble" is that your sense of being in trouble fades really fast. That's how people are built. Most people pay taxes because they're scared of the consequences. So, you don't file one year, and then... nothing that terrible happens! So you're off to the races. And then you get a scary piece of mail from the IRS, and you ignore it, and... nothing terrible happens again! It's very easy for the human mind to acclimate to this.

And then, they will make it so that you can't ignore them. (For instance, your debit card will stop working! Heh.) You should head that off at the pass. The moral being: even if you aren't scared of the consequences now, you will be later.

Ugh, they sent a letter to everyone I've ever worked for! How humiliating!
Nah, it's not. Years ago, the IRS sent out a letter to people who'd paid me money, informing them they had an interest in having that money for themselves. And half the people who got these letters—caring, decent, professional, adult-type people!—were like "Ha, I got one of these letters last year!" It was a moment of bonding. To be fair, one person was a little judgmental, but you are by no means alone in these issues.

So how do I work out paying if I haven't paid?
You know how GE and Bank of America don't pay any taxes? That happens because they're well-advised. You too should be well-advised. Down the road, if you end up in debt with the IRS, you will likely have a couple of options—usually Offer in Compromise or Payment Plan. These are actually not terribly straightforward. For instance, you can work out a payment plan with the IRS, after filling out quite a lot of paperwork, and having your financial life pretty well-surveilled by them, but the IRS is actually required to ensure that you have enough money and income to meet the payment plan. (They can't agree to a payment plan that's onerous.) But that doesn't mean that, even if you are on an installment plan, that penalties don't continue to accrue! So, many people find that they're often better off getting a bank loan. And Offer in Compromise is extremely complicated. With those, for instance, you cannot miss a yearly tax payment for at least the next five years, or the deal is off. So you are going to need to become an expert—but more importantly, you're also going to need to consult with a real expert.

Ugh, I don't know what to do!
Guess what? The IRS only wants to hear from you. Also? These things are never as bad as you think. Now go off to your quiet place and do your 2010 taxes. I can promise you'll be happy you did.

Questions?
Ask away!

Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile.

Sponsored posts are purely editorial projects that we are pleased to have presented by a participating sponsor, advertisers do not produce the content. This post is brought to you by TurboTax.

Photo by the one and only Mat Honan.

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• The bill affirms the tax rates. They are: 10% (for couples with income up to $17,000), 15% (for a single person, $34,000), 25% ($82,400), 28% (up to $171,850), 33% (up to and $379,149) and 35% (more than that!); that last bracket would have gone up to 39.6%.

• Self-employment tax goes down from 12.4% to 10.4%.

• The Social Security payroll tax stays down at 4.2 percent, from 6.2 percent—for annual income up to $106,800. Except for the self-employed! They pay 10.4%.

• Continues the reduced taxes on dividends and capital gains: Those rates are 0% for people in the 25% tax bracket or lower; they are 15% for those in higher brackets.

• The tax on transfer of wealth after death (by which we mean wealth that isn't put into put in foundations or other instruments) will remain at 35%—of all money beyond $5 million (or, essentially, $10 million for giving and/or inheriting couples). Which is to say, all money up to $5 million may be passed along tax-free, so estate taxes affect fewer than .2% of Americans.

• The "gift" tax remains at 35%, beyond an exemption of $13,000 a year and $10 million over a lifetime. The GST tax (inheritance that skips a generation) is taxable above $5 million beginning in 2011.

• There is a tax credit of $1000 for each child in the household, plus a little somethin' extra now in the "Earned Income Tax Credit," for people who made very little money in the year.

• All income levels may now convert individual retirement accounts to a Roth IRA at the extended lower tax rates, and split the taxable proceeds between two years, if they perform the conversion by the end of 2010. Additionally, up to $100,000 of an individual IRA may be given tax-free to charity.

• Teachers may have a deduction of up to $250 for out-of-pocket expenses!

And a few other things that point out that, as BusinessWeek put it, it's a great time to be rich.

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