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Rafael Alvarez

CUNY Dominican Studies Institute

Rafael Alvarez

Dominican Blue Book

While attending the City College of the City University of New York in September 1986, Rafael Alvarez, a recent immigrant, opened his first tax preparation office under the name Alvarez Income Tax Center. The decision would eventually lead to one of the most inspiring success stories of CUNY's many impressive Dominican alumni.

"I came to New York City right after I finished high school in Santo Domingo," he tells me. "I came and I went straight to City College. After we came to this country, my dad one day asked 'Hey, why don't you come with me? I'm going to file my tax return.' 'OK, why not.' So I thought he was really going to file his return, but what he called filing was just dropping off the document. The guy who used to prepare his taxes was the guy who did immigration paperwork for us, so he knew me and he knew our family. My dad used to go there to 'file'—dropping the papers off and coming back after two or three weeks to pick them up. So I said 'Why do you have to wait so long?' He said, 'That's the way it is here. You have to wait.' I thought about it and said to myself, 'Why does everybody have to wait? Why do they do it by hand, when there are computers nowadays and everything should be computerized. That kind of caught my attention, so I started doing some research about why everybody was doing their taxes by hand, not electronically. I was able to find out that the IRS for the past 5-7 years were putting together a program, now called the Electronic Filing Program, that they were going to launch the following year."

Mr. Alvarez immediately realized that in the future all taxpayers would be able to prepare their tax returns electronically.

"The moment that I knew that, I figured, if everybody is doing their taxes by hand now, and the IRS is going to launch this by next year, it means that in the future everybody will be doing their taxes computerized. I was in my second year in college, so I saw a great opportunity. Right then I started doing some research to see if there was any tax preparation software available. I was able to find a very primitive tax preparation program. I was able to get the software-- back then it came on a floppy disk. So I kind of started in the industry in 1986. That was my first tax season. I ordered supplies. I had 1040 forms that I was printing out on perforated paper with black carbon paper attached.I did about 300 tax returns and I kind of enjoyed it, I kind of liked it. I said 'This thing has a lot of potential, it's not that difficult to do.'"

During his first tax season, Mr. Alvarez prepared about 350 personal income tax returns. "So that's what really started the whole thing, and from there I started doing more and more. When I started, tax season came and after April 15, I said, 'Now what?' I was very popular at City College. I used to be the President of the Day Student Government at CCNY and the Hispanic Club. So I opened a location across the street, on Amsterdam Avenue between 136th and 137th Streets." Mr. Alvarez began offering different services in addition to tax preparation, including immigration, travel, money transfer, printing and word processing services, as well as beepers, cell phones, and pagers, but in the end, by 1996, he found it more profitable to focus strictly on tax, accounting and financial services.

In 2001, Mr. Alvarez renamed the company AlvarezTax with one goal in mind - to be the number one provider of tax preparation services in the Washington Heights area of New York City. After moving the business from Hamilton Heights to Washington Heights, things really began to take off. By 2003, Mr. Alvarez was preparing 7,000 personal income tax returns and 150 business tax returns. In 2005, Mr. Alvarez opened his second location in the River Plaza Shopping Center in Marble Hill in the Bronx, NY. The following year, the Marble Hill office became the main office, preparing more than 10,000 personal income tax returns and 450 business tax returns. During 2007, Mr. Alvarez hired Victor Morisete as a Business Consultant to analyze the tax preparation industry and to look at the possibilities of franchising. Mr. Morisete conducted an analysis for the launch of the franchise venture, which included a substantial amount of, information related to the viability, need and demand for tax preparation services. A survey of 225 clients was conducted to compare the value of their service for the cost versus 24 other tax preparers in the region. Other business areas Mr. Morisete assessed included need, competition, economic climate, target market demographics, pricing strategy, franchisee support strategies, availability of qualified franchisees, training requirements and models, potential franchise revenues and methods for franchisees to generate revenues. The analysis revealed the lack of a nationwide tax preparation franchise owned by, managed by, or targeting the Hispanic or Latino community, which gave us with a potential advantage over the major players in the industry.

"I also contacted one of the best attorneys in the city, who handles big franchises including Miss Universe, Hilton Hotels, Kentucky Fried Chicken, and launched the first Latino-owned franchise in the tax preparation industry," Mr. Alvarez tells me. At the end of 2007, "ATAX Accounting and Financial Services" was officially established as a franchise offering. Since 2007, ATAX has become one of the fastest growing franchise companies in the nation.

ATAX now has 40 locations, mostly on the East Coast: in New York, New Jersey, Pennsylvania, Rhode Island, Georgia, and Florida, among others.

"Because of my lack of knowledge of the franchising industry, I built a 'dream team' of people experienced in both tax preparation and franchising." Between 2000 and 2008, the company grew steadily. Mr. Alvarez decided to go public in 2008.

The majority of ATAX's locations are owned by Dominicans, mostly women. "These are people who understand the future of this country," Mr. Alvarez tells me. Out of the 10,000 tax returns now being filed yearly at ATAX, however, only 40% are for Hispanic clients, perhaps 30% for Dominicans. The other 60% is very diverse, ethnically and geographically, including many clients of Asian origin and many who are filing their taxes from overseas.

Mr. Alvarez recently learned that he will be the 2014 recipient of the Ronald E. Harrison Award from the International Franchise Association. The award recognizes organizations or individuals who have made significant contributions to minorities in franchising. It is the equivalent of the Oscars in the franchising industry.

"Being Dominican has affected my work," affirms Mr. Alvarez. "We came here hungry to succeed, hungry to excel and do better. I came to this country with a lot of dreams, trying to make it big. I knew that since I'm Dominican, I have to work twice as hard to get to where I am now: harder than Dominicans here, harder than Dominicans back on the island, harder than everybody else too. I would say being Dominican shaped the way I perform: I get it done Dominican-style.

"Two people influenced me tremendously: one was my dad, my role model. He was always working hard and doing everything possible to keep the family together and be able to give us the best education ever. He always used to say that when he dies, he won't be able to leave us lot of money or property to leave us, but that he will give us something more valuable, which is a great education. He was a tremendous influence when I was growing up. He was all about learning as much as you can.

"The other person was my basketball coach in the Dominican Republic. He kept me out of trouble, especially during those teenage years, focusing on sports and my schoolwork. He was a great influence. He motivated me to achieve, to go for higher things, not settle for less. So I was always trying to do better and better and better, push myself harder and harder and harder. So those two were the biggest influences."

What is Rafael Alvarez planning next? "I'm trying to take it to the next level. I want to team up with investors and find capital." He hopes to expand the business to between 500 and 1000 locations in the next several years, while 5-10 new ones are slated to open before the end of 2014. "I'm having fun," he says. "This is a very ambitious project. Right now, I'm getting ready to open a location in Texas," with others in Florida and Georgia to follow soon. "Competitors are taking me more seriously now. Franchising is a huge investment, so it's a big gamble," but little by little, the gamble has begun to pay off.

In addition to winning the IFA's prestigious Ronald E. Harrison award mentioned above, ATAX has just been recognized by USA Today as #3 in a survey of minority-owned companies in the US. "According to the International Franchise Association," Mr. Alvarez tells me, "out of at least 3000 franchise concepts, only about 10-15 are minority-owned, and only three or four are owned by Latinos. Franchises make up one third of the US economy, but franchising is very difficult." In time, he is confident, other Dominicans will explore this fertile ground.

I ask him what the most difficult challenge of his work is, and without hesitation he answers, "Finding capital. It's not easy. Banks are not willing to lend unless you really have some backing."

Mr. Alvarez likens the progress of his company to assembling a sports car with a view to eventually racing. "I look it this way: I've been building a Ferrari, I have built it finally, and now I need fuel." When he finds the fuel he is looking for, that Ferrari will move fast. ATAX's comprehensive menu of services, including payroll and bookkeeping, have brought interest from various large concerns, including the owners of Goya Foods.

Finally, I ask Mr. Alvarez to offer some words of advice for the young.

"Always keep dreaming. Don't give up, no matter how many times people tell you to. If you have a passion for something, give it your best shot. Better to fail by trying than not to try. Just remain focused."