Liberty Tax Service announced the acquisition of eSmartTax, the income tax preparation business of San Jose, Calif.-based C&S Technologies.

Financial terms of the deal, which does not include C&S’s payroll tax-related filing services, were not disclosed.

Tax prep franchiser Liberty said that the move is aimed at bolstering its Internet presence and increasing customer retention by giving filers a product offering for paid filers and “do-it-yourselfers.” With the acquisition, Liberty said that it joins tax prep giant H&R Block Inc. as the only two national firms offering both an online and brick-and-mortar solution.

 The eSmartTax acquisition will allow Liberty customers to prepare and file individual tax returns on the Internet through the company’s Web site, or through the Internal Revenue Service’s Free File Alliance site.

Liberty chief executive John Hewitt noted that online filing is the fastest-growing segment of the tax industry, with 21.7 million individual U.S. tax returns filed last year over the Internet.

The new online program will be called Liberty Tax Online and features an IRS form-based application, online help, guaranteed calculations and a Spanish language version.

“Due in most part to their complexity, well over half of all tax returns started online aren’t completed,” Hewitt said, in a statement. “Our goal is to move those filers who don’t finish their online returns into one of our nearby offices.”

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