So far, tax season as not been kind to the number two tax preparer in the U.S., Jackson Hewitt Tax Service Inc. (NYSE: JTX). A slow start to the season led to a sharp decline in fiscal third-quarter earnings, the company reported today. Net income in the quarter ended January 31 fell 34% to $18.2 million, or 61 cents per share, from the year-ago period. Revenue was down 15% to $97.6 million. Analysts surveyed by Thomson Financial had expected profit of 99 cents per share on revenue of $118.4 million.

Jackson Hewitt shares dropped more than 30% on Tuesday, reaching a new multi-year low of $13.51, and closed at $13.68.

The leading U.S. tax preparer, H&R Block Inc. (NYSE: HRB), is scheduled to report fiscal third-quarter results tomorrow. It has missed earnings estimates in three of the past four quarters. For the current quarter, analysts polled by Thomson Financial expect earnings of 6 cents per share, compared to 8 cents in the year-ago quarter.

H&R Block's earnings per share growth forecast for this year is 19.5%, better than the industry average of 13.7%, as well as Jackson Hewitt's 16.3%. The analysts' consensus recommendation is to buy HRB. Shares have risen from the 52-week low of $16.89 in January, but today continued their recent slide to close at $17.82.

When T.S. Eliot began The Waste Land noting that "April is the cruelest month," the American poet wasn't talking about tax season. But anyone who has ever been audited might adopt the phrase to suit their circumstances . . . and the month is rapidly becoming crueler and crueler each passing year.

According to an article in today's New York Times, the Internal Revenue Service has become increasingly more likely to audit middle-class Americans. In fact, since 2000, audits have nearly tripled among those taxpaying Americans who earn between $25,000 and $100,000 per year. During the past six years, middle-class households (who make up nearly half of all taxpayers) have seen their odds of an audit rise from 1 in 377 to 1 in 140.

Kevin Brown, the I.R.S. deputy commissioner, said the agency's audit practices previously paid too little attention to the middle class, focusing instead on those making $1 million or more. "We try to run a balanced audit program," he now confirms. Even with the ramped-up audits on the nation's middle class, those in the highest tax bracket remain more like to be audited. Taxpayers with income above $100,000 have a 1 in 59 chance of being audited; those fortunate enough to make $1 million or more enjoy the misfortune of a 1-in-16 chance of an audit. Finally, those making below $25,000 face only a 1 in 94 chance of enduring an audit.

If you are among the unlucky middle-class households to be audited, and if evidence of errors are found in your documents, the average penalty is about $4,100.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.