With many indications showing that the Internal Revenue Service is behind in the number of tax returns filed so far this year compared to last year, Liberty Tax Service reported positive growth Wednesday in revenue, same-store sales and tax returns filed.

Liberty was founded in 1997 by John Hewitt after he left Jackson Hewitt, a company he co-founded in 1982 after leaving H&R Block, and has grown to become the third largest tax prep chain behind its two rivals. Liberty now operates 3,800 offices in the U.S. and Canada.

Despite bitter snowstorms, and the fact that many forms such as the Schedule A to report itemized deductions can’t be filed until February 14, Liberty Tax is up 17.9 percent in the number of tax returns filed through January 31, and revenue has risen 18.7 percent from this time last year. Same-store sales have increased 13.1 percent.

“We believe the economy is slightly better than a year ago, and the payroll tax rebate has increased consumers’ take-home pay,” said Hewitt in a statement. “Many people are not hurrying to file as they did last year. Yet, Liberty is surpassing last year’s numbers.”

Earlier this week, Jackson Hewitt filed suit against H&R Block, claiming false and deceptive advertising by Block (see Jackson Hewitt Sues H&R Block over Ads). The two tax prep chains have been hurt the past two tax seasons by problems with their refund anticipation loan business. Banking partners have pulled back from supporting the loans in the wake of banking regulator demands for more capital at Santa Barbara Bank & Trust and problems with the IRS debt indicator. SBBT was Jackson Hewitt's main RAL provider, although it has increased its business with Republic Bank.

Last August the IRS announced that it would not offer a debt indicator this tax season to indicate to tax preparers and RAL providers that taxpayers owe outstanding debts to the government or for child support or delinquent student loan payments. The lack of a debt indicator, and increasing riskiness of the loans, also caused banking providers like HSBC to reconsider their deals with the tax prep chains.

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