It also hasn't helped that some of H&R Block's peers in the tax-prep space are offering what's known as tax refund anticipation loans (or RALs), which are sometimes marketed as "instant" tax refunds. The RALs had had gone away for several years after some state attorneys general and regulators had criticized them as predatory lending. The RALs are particularly popular for lower-income families and those without bank accounts, a key customer base for tax-prep firms such as H&R Block.
"These are loans in which consumers will pay 20 percent of their tax refund in order to get their proceeds three weeks earlier in some cases," Palmer said in an interview. "If you look at the APR (annual percentage rate) on that kind of transaction, it's extortion. But what you see is some of H&R Block's competitors are offering these and H&R Block is not so that they are at a disadvantage."
H&R Block declined comment for this story.
Shares of Liberty Tax, a competitor of H&R Block, are down about 25 percent year to date through Wednesday — and Blucora, a provider of the do-it-yourself TaxACT software, is off more than 40 percent in the same stretch.
Yet, Intuit appears to be a winner so far this tax season with more Americans opting for self-prep e-filing — and its stock is holding up better, too. Intuit shares are up 7 percent for the year through Wednesday, beating the S&P 500's 1.8 percent advance.
"The first few updates that were provided show Intuit is gaining share really at everybody else's expense," said Wedbush Securities analyst Gil Luria, who covers Intuit and H&R Block. "They've convinced a lot of people to switch from going to a tax store to doing taxes by themselves."
With this year's April 18 tax filing deadline around the corner, the IRS's latest data show a 2.3 percent increase in self-prep e-filers (good proxy of consumer tax software demand) through April 8 compared with a year ago. At the same time, the number of professional e-filers (CPAs and tax stores) is down by 5 percent.
Still, the tax preparation business is growing at about 1 percent to 2 percent per year on average, or roughly the rate of the nation's gross domestic product, according to Palmer. Some saw the potential for tax-prep volumes to accelerate this year with the Affordable Care Act adding complexity to the tax-filing process.
"There was some enthusiasm associated with a potential increase in tax preparation volumes associated with the tax-related provisions of Obamacare," said Palmer. "And while they have to some extent, I don't think it's the extent that many investors had hoped for."
Obamacare "actually has increased prices because less people have simple filings because of the Affordable Care Act," Luria said. "So less people can spend $100 doing their taxes — and more people need to spend $150 or $200. So the Affordable Care Act has actually helped H&R Block. It's just that the volume declines have been greater than the price benefits from the ACA."
Nationwide, the average tax return preparation fee for typical individual tax returns in 2015 was $273, nearly 5 percent higher than 2014, according to a survey by the National Society of Accountants. The cost of tax-prep services in the Pacific region — California, Oregon, Washington, Hawaii and Alaska — was on average about one-quarter more than the national average.