The Latino market for tax prep has grown by leaps and bounds and is an enormous opportunity for those who can understand how to tap it, according to Carlos Lopez, executive director of the Latino Tax Professionals Association in Salinas, Calif.
Tax preparers often misunderstand and underserve the Latino market in terms of professional guidance and education, seeing the market as “strictly short forms and mom-and-pop shops,” said Lopez, a preparer for some 30 years. “I do believe the tax preparation industry is beginning to understand the market. There are cultural differences, however, that are not understood.”
One in about every six U.S. residents is now Hispanic, according to the U.S. Census, and Hispanics accounted for more than half of the nation’s population increase over the last decade. Lopez, who has a long history of working in this market, believes these potential clients can come into your office with an entrepreneurial spirit and work ethic that can mean big fees for those who know how to service them.
There are more first- and second-generation Hispanics than ever before, Lopez said, most in young families where both parents work and have two or more children. “Many retailers are serving the Hispanic market and understand the buying power of the Hispanic,” he added. “What many retailers don’t understand is how to reach out to the Spanish-speaking market, both in language and culturally.”
Culturally, for example, some Spanish-speaking clients may have memories of life in nations where compliance with government regulations differed greatly from such compliance in the U.S., and where corruption was prevalent, he noted, adding that one key to serving this market may be recognizing its familiarity with the “marketplace” or “mercado” characteristic of shopping.
“If they trust a real estate agent, a notary public, a tax preparer, they’ll trust the professional with most of the professional’s advice or other services,” Lopez said. But often, he added, these “preparers” understand the prep software but not the legalities and complexity of taxes, he added, nor do tax prep chains always understand that the IRS wants Spanish-speaking preparers to be in compliance.
The IRS has long recognized the need to furnish Spanish-language publications, instructions and forms to the ever-growing Spanish speaking population in the U.S. and Puerto Rico.
“The United States is now recognized as the second-largest Spanish-speaking country in the world, and the IRS knows it,” said Lopez, adding that the Registered Tax Return Preparer initiative led him to “recognize that a large part of the IRS efforts would need to focus on the Spanish-speaking tax preparer. The un-enrolled preparer is the largest group of professionals in the U.S. who are not affiliated with any professional association; the most difficult test most of this group has taken is a driver’s test. Many have never tested online, have never studied professional publications nor attended a live training session,” he said.
(In Part Two, Lopez will offer observations and advice on penetrating and marketing to the growing Latino market.)
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