April sees strong demand for mobile, self-guided tax filing

Results from the AI-powered tax filing product’s April 2023 customer impact study suggest that customers are receptive to a self-guided, mobile-centric process. Among the advantages are significant time savings, convenience and maximized reimbursements.

April partners with banks, fintechs and payroll providers to help taxpayers file, estimate and optimize their taxes within existing financial apps. One of today’s most unique fintech solutions, April’s tax solutions are designed to be white labeled and seamlessly integrated. A list of notable investors back the company, including Treasury, QED, Nyca Partners, Team8Euclidean Capital and Atento Capital.

Clients get year-round tax information and optimization opportunities, preventing tax season shocks and speeding up the filing process. They report increased product engagement, monthly active users (MAU), and deposit growth, with up to 99% of users depositing their tax refunds into partner accounts.

What April was looking for in partners

In preparation for filing season, April has partnered with more than 20 financial services, fintech and payroll companies, including Gusto, Dayforce Wallet, Rain and Zenledger, to make its services available to more customers.

Ben Borodach said April was very thoughtful in her search for partners.

Co-founder and CEO Ben Borodach said April looks for three key elements from partners seeking integrated tax services, starting with trust and brand affinity.

“We specifically look for partners who have developed innovative, category-defining products,” Borodach said. “As leaders in their industries, they enjoy a strong brand and product affinity, which is critical to our collaborative efforts.”

Data entry capabilities are crucial to the integrated model, the success of which often depends on using existing customer data to speed up the archiving process.

“Our most successful partnerships, particularly in payroll, leverage extensive income data that can be directly imported to significantly alleviate the burden of manually entering information into each form field,” Borodach explained.

Strong marketing and product communication are the final elements. It is essential to send timely reminders and critical updates. Taxpayers need access to important information at every stage.

The results are: speed and certainty of costs (low).

Nearly half, 47%, of taxpayers completed their return in less than an hour, with the average return taking 43 minutes. According to April, the IRS reported an average of 13 hours to complete taxes.

The process is not only faster but also cheaper. April has worked with partners to commit to a 100% flat-fee or free storage structure; 95% applied for free.

Borodach said the unique pricing structure addresses frequent complaints about other solutions’ complex, obfuscated pricing models and constant upsells. Taxpayers often do not know how much they will have to spend on the return until they are already in the advanced stages of completing the product.

“We simply built the product so that there was no possibility of dynamic pricing based on your tax situation, and we had all partners commit to a simple, upfront pricing model (free or flat fee of $X from present),” he explained. “Our partners pay us a flat rate per file – there is no revenue implication in not offering a more complex user-facing pricing model.”

And a responsive bot

Virtually all, 98%, were sent via mobile, and 51% of requests were resolved by a specially trained AI chatbot. Its success is based on taxpayer requests from previous years, recent tax code changes, and Help Center articles. When prompted, April created concise content snippets that answered specific questions.

“The real difference we saw in terms of effectiveness compared to the big players was the limitation of the source content from which the bot could get answers,” Borodach said. “Other companies put a layer of AI on top of a large amount of forum data, which increases the likelihood that the bot will return an irrelevant or incorrect response. Our Help Center articles were written by experts, so there was less margin for error in producing accurate and relevant results.”

April attracted tax first-timers and product switchers

The service clearly impressed customers: 27% of April customers reported it was their first filing, while 34% reported switching from TurboTax.

Borodach believes the notable number of first-time applicants is due to the ability to import data from partners, significantly speeding up the submission process. Partners’ established trust with their user bases also helped.

Honesty and convenience have convinced many to change. Data was imported easily and irrelevant questions were skipped. Borodach said many filers are frustrated with the “bait and switch” tactics used by other options that lure users with a “start paying” option before adding fees throughout.

“Instead, April’s transparent, flat-fee or free pricing model, along with the convenience of storing via an app you already use, made the choice clear,” Borodach concluded. “The ability to file with pre-populated forms has not only saved time, but has also convinced many to abandon previous filing methods.

“Additionally, many of those who previously relied on accountants chose to apply independently in April for the first time, often citing the ease of the experience in their positive reviews.”

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• Tony is a long-time contributor in the fintech and alt-fi spaces. Twice named journalist of the year at LendIt e winner in 2018, Tony has written more than 2,000 original articles on blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT’s Unchained, a blockchain expo in Hong Kong. Email Tony here.

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