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H&R Block, Inc., or H&R Block, is an American tax preparation company in North America, Australia, and India. The Kansas City-based company also offers payroll, and business consulting services.

H&R Block, Inc.
Public
Traded as
Founded January 25, 1955; 63 years ago (1955-01-25)
Kansas City, Missouri, U.S.
Founder
Headquarters Kansas City, Missouri, U.S.
Area served
United States, Canada, Australia, India
Key people
Products
Revenue Decrease $ 3.0 billion (FY 2017)[2]:20
Increase $ 409 million (FY 2017)[2]:20
Total assets Decrease $ 2.7 billion (FY 2017)[2]:20
Total equity Decrease $ (60 million) (FY 2017)[2]:20
Number of employees
  • 2,300 (regular full-time in 2017)
  • 87,500 (including season employees)[2]:5
Website hrblock.com
H&R Block World Headquarters building in Kansas City, Missouri.

Founded in 1955 by brothers Henry W. Bloch and Richard Bloch, H&R Block currently operates approximately 12,000 retail tax offices worldwide. They offer consumer tax software, formerly called TaxCut, as well as online tax preparation and electronic filing from their website.

Contents

HistoryEdit

During World War II, Henry W. Bloch was a young Army Air Forces navigator who wanted to start a family business with his brothers in Kansas City.[3]

Home from the war in 1946, Henry saw a pamphlet suggesting a bright future for companies serving small businesses, and it fired his imagination.[3] That year, Henry and his older brother, Leon, borrowed $5,000 and opened a small bookkeeping business on Main Street in downtown Kansas City.[3] However, four months later, they had few clients and Leon decided to seek a law degree.[3]

Henry wanted to keep trying with the fledgling business and placed a newspaper ad for help-wanted.[3] He got an unexpected response—from his mother—who proposed that Henry hire his younger brother, Richard, for the job.[3] Henry and Richard Bloch jointly ran their United Business Company, which focused on bookkeeping, but also did some income tax work for clients. The brothers found that doing taxes was time consuming and they decided to end that type of service. One of their clients, John White, an ad salesman for The Kansas City Star newspaper, had a different idea; he suggested the Blochs make tax preparation a separate business and developed an ad announcing $5 tax services. The Blochs were not convinced, but they agreed to run the ad in January 1955. The next day, the brothers had an office full of tax clients, and H&R Block was born.

In 1956, the Bloch's decided to expand and picked New York City. The move was profitable, but neither brother wanted to move to New York, so they agreed to sell that regional operation to two local accountants. However, since the would-be buyers could not meet the asking price, the parties agreed the Bloch brothers would get $10,000, plus royalties from the tax operation, creating the first H&R Block franchise tax office. The Bloch brothers chose to spell the name "Block" with a K to ensure the name is not mispronounced "blotch."[4] In the following years, H&R Block grew quickly and went public in 1962, then opened its first tax training school in 1965 to meet the demand for skilled tax professionals at its franchise offices.

A TV ad campaign begun in 1972 featured Henry Bloch and became the springboard for H&R Block becoming one of the most widely recognized brand names in the U.S. In 1980 H&R Block purchased the Compuserve online service.

By 1986, Block was handling more than 10 million tax returns each year and had opened offices in Canada and Australia. That year, Block worked with the Internal Revenue Service to introduce electronic filing. Since then, Block has moved further into the digital realm with tax software and online tax preparation.

 
An H&R Block in Gillette, Wyoming

The company began to expand in the 1990s into the financial services arena, offering mortgage loans, banking, and business services. H&R Block purchased Olde Discount Stockbrokers and operated as a full-service securities broker-dealer under the name H&R Block Financial Advisors. By 2007, the unit was managing $33 billion in assets, offering investment planning, advice and related financial products and services, and employed 900 financial advisors in the U.S. In 2008, H&R Block sold the unit to Ameriprise Financial for US$315 million.[5]

RSM McGladrey Business Solutions was created in 1999 when H&R Block acquired the assets and business of McGladrey & Pullen, based in Bloomington, Minnesota. McGladrey had 100 offices in 25 states and offered accounting, consulting, tax services, and international business services to mid-sized companies. Its clients included business in the construction, health care and manufacturing industries. Through an alliance with McGladrey & Pullen and other accountancies, the Block subsidiary operated in 70 countries under the RSM International name. In 2011, H&R Block sold the unit to McGladrey & Pullen.[6]

Business areasEdit

Retail and digital tax servicesEdit

H&R Block has 70,000 tax pros[7] in its 10,000 U.S. retail tax offices.[8] In addition to the company's traditional retail tax offices, it offers digital tax preparation programs and software. It filed 23 million tax returns worldwide in 2016.[9][10]

The company's services Tax Pro Review and Tax Pro Go were launched in 2017.[11] Tax Pro Review is an updated version of its former service Best of Both, where clients enter their information and do their returns online and are matched with Block tax professional reviews for help.[11] H&R Block Tax Pro Go is marketed to online filers who do not want to or cannot visit an H&R Block office.[12]

H&R Block's tax software comes in different versions. In addition to the free edition, there are Deluxe, Premium and Self-Employed editions. Users can log on using various devices, import photos of their W-2 forms and use a searchable knowledge base. The Deluxe and Premium editions include free online chat with a tax professional.[13]

 
H&R Block Tax Service - Mar 2013

Block AdvisorsEdit

In January 2016, H&R Block launched Block Advisors, a service that provides year-round consumer tax preparation.[14] The company has opened about 350 Block Advisor offices.[15] Its advisors include certified public accountants, enrolled agents, or have been certified by H&R Block as master tax advisors.[16]

PartnershipsEdit

The company signed a deal with Walmart in 2018, to make H&R Block software the only desktop tax preparation software sold at the retailer's stores.[17] H&R Block also created a deal with Amazon.com in 2017 for better product placement of its suite of software products.[18]

In 2017, H&R Block partnered with IBM to bring IBM Watson technology into its retail offices. Under the partnership, H&R Block tax pros received access to IBM's artificial intelligence system to help tax pros prepare better tax returns for clients.[19][20]

In 2018, H&R Block partnered with LendingTree to allow customers credit score access via MyBlock.[21][22]

Other products and servicesEdit

Following research on the potential expat market in 2013, H&R Block began its Expat Tax Services program to offer tax advice to U.S. citizens living outside the country.[23]

H&R Block maintains financial services products, including the Emerald Card pre-paid debit card[24] and Emerald Advance line of credit.[25] Additionally, the company's Tax Identity Shield offers identity theft protection.[26]

 
H&R Block office, Ypsilanti, Michigan

Former business areasEdit

The H&R Block Bank was chartered in 2006 and offered low-cost services to its low- to moderate-income customers. In September 2015, H&R Block sold H&R Block Bank to BofI Holding Inc.[27] The two companies reached an agreement for BofI to serve as the bank for H&R Block-branded financial services products including the Emerald MasterCard, Refund Anticipation Checks, and Emerald Advance lines of credit.[28]

ControversiesEdit

H&R Block's own taxesEdit

In August 2005, H&R Block announced that it had overstated its earnings for 2003 and 2004 by $91.1 million. The company stated that it had "insufficient resources" to identify and report complex transactions in its corporate tax accounting. On February 23, 2006, the company said in its quarterly results that it had miscalculated its own state income taxes for 2005 and 2004, and that it owed an additional $32 million in back taxes. That mistake, plus Block's lower-than-expected earnings for the quarter, caused its stock price to drop by 8.5 percent in one day. On April 30, 2008, the company's liability recorded for "uncertain tax positions" totaled $137.6 million (excluding related interest and penalties). According to H&R Block, "This liability represents an estimate of tax positions we have taken in our tax returns that may ultimately not be sustained upon examination by the tax authorities." Estimated gross interest and penalties relating to these potential assessments totaled an additional $47.5 million.[29][30]

Refund anticipation loansEdit

On February 15, 2006, California Attorney General Bill Lockyer sued H&R Block, alleging the company's refund anticipation loan (RAL) business violated state and federal laws in its marketing and providing of high-cost RALs mainly to low-income clients. Block responded that it "believes the refund lending program is both fair and legal, and will vigorously defend against the complaint". On January 2, 2009, California Attorney General Edmund G. Brown Jr. reached a $4.85 million settlement with H&R Block, which prohibits the company from deceptively marketing high-cost refund anticipation loans as early "tax refunds". Consumers received up to $2.45 million in restitution if they purchased a "refund anticipation loan" or a "refund anticipation check" through H&R Block between January 1, 2001 and December 31, 2008. In addition, H&R Block agreed to pay $500,000 in penalties and $1.9 million in fees and costs.[31][32] In 2011, H&R Block ceased offering RALs altogether, a move praised by consumer protection activists.[33]

Express IRAEdit

On March 16, 2006, New York Attorney General Eliot Spitzer sued H&R Block, accusing the company of deceptive marketing of its Express IRA retirement accounts. The lawsuit alleged the company assessed fees, including set-up fees, annual fees, and account closing fees that, for 85% of account holders, resulted in the account losing money.[34] However, in July 2007, a New York state judge dismissed much of the lawsuit.[35] Justice Karla Moskowitz of the State Supreme Court excused Block and five of its units from the lawsuit. She let stand the portion of the complaint concerning another unit, H&R Block Financial Advisers, but dismissed allegations of common law fraud. At the time of the ruling, Block said it believed the remaining assertions lacked merit and that it would appeal. On January 6, 2009, a New York state appeals court overruled trial justice Karla Moskowitz's July 2007 ruling and reinstated the lawsuit against H&R Block Inc that accused the company of fraudulently marketing Express IRA retirement accounts to hundreds of thousands of lower-income clients nationwide.[36] The matter was settled in 2009.

Social security numbersEdit

In December 2005, H&R Block sent its customers free copies of its TaxCut software, and the mailing labels on the packages mistakenly included the recipients' Social Security numbers. Block said it sent the promotional mailing to former customers and people whose names were taken from purchased lists. The company said it is legally required to hold on to customers' tax information, including Social Security numbers, for three years. Block said no customer data has been lost or stolen as a result of the mistake, and that less than 3 percent of the mailings were involved.[37]

ReferencesEdit

  1. ^ "H&R Block names Jeff Jones as president and CEO". 22 August 2017. Retrieved 14 December 2017. 
  2. ^ a b c d e "2017 Form 10-K". H&R Block. 2017. Retrieved 21 February 2018. 
  3. ^ a b c d e f henrybloch.com, Many Happy Returns, Thomas M. Bloch, 2010.
  4. ^ Hoffer, William (1987). "Bloch that IRS return — H&R Block Inc.'s income tax preparation service". Nation's Business. [dead link]
  5. ^ Company press release
  6. ^ Kansas City Business Journal | date=Dec. 1, 2011
  7. ^ DePillis, Lydia (19 October 2017). "Trump's tax plan isn't as big of a threat to H&R Block as he says". CNNMoney. Retrieved 26 February 2018. 
  8. ^ H&R Block opens offices early, Accounting Today, 2 January 2018
  9. ^ Schaust, Sam (22 August 2017). "Target's Former Chief Marketing Officer to Become CEO of H&R Block". Twin Cities Business Magazine. Retrieved 26 February 2018. 
  10. ^ Steverman, Ben (24 January 2017). "Who Won the Battle for Cheapest Tax Prep in 2017?". Bloomberg LP. Retrieved 26 February 2018. 
  11. ^ a b Cohn, Michael (8 December 2017). "H&R Block plans new tax pro services". Accounting Today. Retrieved 26 February 2018. 
  12. ^ Davis, Mark (6 December 2017). "H&R Block targets customer gains over price increases for upcoming tax season". Kansas City Star. Retrieved 26 February 2018. 
  13. ^ Tina Orem (26 January 2018). "H&R Block Tax Software Review 2017". NerdWallet. Retrieved 26 February 2018. 
  14. ^ Berg, Joel (15 January 2016). "Tax season opens with a 'new' player". Central Penn Business Journal. Retrieved 27 February 2016. 
  15. ^ Isaac M. O'Bannon (19 January 2017). "In 2nd Year, Block Advisors Has 347 Tax and Accounting Offices, Partnership with Xero". CPA Practice Today. Retrieved 26 February 2018. 
  16. ^ Greenberg, Gregg (16 February 2016). "H&R Block's ambitious plans for new advisors brand". The Street. Retrieved 26 February 2018. 
  17. ^ Franck, Thomas (16 January 2018). "Shares of H&R Block jump after it announces an exclusive partnership with Walmart". CNBC. Retrieved 26 February 2018. 
  18. ^ Dornbrook, James (6 December 2017). "H&R Block brings on Amazon, Wal-Mart as retail partners for tax season". Kansas City Business Journal. Retrieved 26 February 2018. 
  19. ^ Lohr, Steve (1 February 2017). "IBM gives Watson a new challenge: Your tax return". The New York Times. Retrieved 26 February 2018. 
  20. ^ Vanian, Jonathan (1 February 2017). "H&R Block Is Enlisting IBM's Watson To Help With Your Taxes". Fortune. Retrieved 26 February 2018. 
  21. ^ Stimpson, Jeff (13 March 2018). "Block to offer clients credit scores and analysis". Accounting Today. Retrieved 22 March 2018. 
  22. ^ "Block grows portal with LendingTree features". Banking Exchange. 13 March 2018. Retrieved 22 March 2018. 
  23. ^ Burggraf, Helen (1 April 2015). "On the Trail of the Elusive U.S. Expat Taxpayer". The Wall Street Journal. Retrieved 26 February 2018. 
  24. ^ Dornbrook14, James (28 January 2014). "H&R Block partnership expands Emerald Card network". Kansas City Business Journal. Retrieved 26 February 2018. 
  25. ^ Dornbrook, James (16 November 2016). "H&R Block: Government will delay refunds for millions". Kansas City Business Journal. Retrieved 26 February 2018. 
  26. ^ Tompor, Susan (11 February 2016). "Don't give fraudsters a hand filing a fake tax return". Detroit Free Press. Retrieved 26 February 2018. 
  27. ^ Davis, Mark (1 September 2015). "H&R Block sheds bank and unveils $3.5 billion stock buyback plan". Kansas City Star. Retrieved 26 February 2018. 
  28. ^ Dornbrook, James (5 August 2015). "After long delay, regulators approve H&R Block Bank sale". Kansas City Business Journal. Retrieved 26 February 2018. 
  29. ^ "Financial Statements and Supplementary Data". United States Securities and Exchange Commission. Retrieved 2011-11-14. 
  30. ^ "H&R Block Flubs Its Own Taxes – Fox News". Fox News. 2011-10-21. 
  31. ^ Jerry LaMartina (2006-02-15). "AG sues H&R Block over refund-anticipation loans - Sacramento Business Journal". Sacramento Business Journal. Retrieved 2011-11-14. 
  32. ^ "Attorney General Brown Reaches Agreement with H&R Block Prohibiting Deceptive Marketing of Tax Refund Loans". Office of the Attorney General, State of California Department of Justice. 2009-01-02. Retrieved 2011-11-14. 
  33. ^ "Consumer Advocates Applaud H&R Block Decision to Forego RALs and Urge Republic, Jackson Hewitt and Liberty to Stop Making High Cost Loans - Consumer Federation of America" (PDF). 2011-09-14. 
  34. ^ Spitzer brings fraud suit against H&R Block, CNN Money, David Ellis, March 16, 2006. " . . One unnamed 32-year-old from Albany, NY resident cited in the complaint opened an Express IRA account in 2002 with the minimum contribution of $300. The account earned $10.29 in interest over the past four years; the account holder paid $45 in fees over that same period of time. . "
  35. ^ "Judge Mostly Clears Block". The New York Times. 2007-07-13. Retrieved 2011-11-14. 
  36. ^ "N.Y. court reinstates IRA lawsuit against H&R Block". Reuters. 2009-01-08. Retrieved 2011-11-14. 
  37. ^ Twiddy, David (2006-01-04). "H&R Block makes error in software mailing". USA Today. Retrieved 2011-11-14. 

External linksEdit