H&R Block
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H&R Block (NYSE: [HRB]
H&R Block, followed by Jackson Hewitt, is the largest provider and marketer of Refund Anticipation Loans, which are disproportionately given to low-income recipients of the Earned Income Tax Credit (EITC). H&R Block has changed some of its lending practices to conform with fair practice standards urged by ACORN and other consumer groups.
In 1980, H&R Block acquired CompuServe as a source of revenue in the time after tax season. CompuServe was sold in 1997 in a three-way transaction between AOL and Worldcom. AOL currently owns CompuServe.
Other H&R Block services include financial planning, electronic filing, tax preparer school, and TaxCut software.
Mistakes and controversy
H&R Block's own taxes
In August 2005, H&R Block announced that it had overstated its earnings for 2003 and 2004 by $91.1 million. [link] It stated that it had "insufficient resources" to identify and report complex transactions in its corporate tax accounting. [link]On 2006-02-23, the company admitted in its quarter 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 its lower-than-expected earnings for the quarter caused its stock price to drop by 8.5% in one day. [link]
Refund anticipation loan business
On 2006-02-15, California's attorney general Bill Lockyer sued H&R Block over its refund anticipation loan business, whose interest rates top 500% including fees. Lockyer said the company falsely portrays the nature of the loans, advertising "cash, cold, green, in your hand, out the door." In May 2005, a federal judge in Chicago rejected a $360 million settlement as inadequate. [link]Express IRA
On 2006-03-16, New York Attorney General Eliot Spitzer sued H&R Block for selling its Express IRA alleging that the IRA earned less money than what customers paid in fees. The complaint accuses Block of fraudulent business practices, deceptive acts and practices, fraud and breach of fiduciary duty. The company said it will fight them in court. [link]Trivia
On 2004-11-30, Ken Jennings lost after winning 74 straight appearances on the national quiz show Jeopardy! when he incorrectly responded "What is FedEx?" instead of "What is H&R Block?" on the Final Jeopardy! clue. The clue read "Most of this firm's 70,000 seasonal white-collar employees work only four months a year." H&R Block subsequently offered Jennings personal finance and tax preparation services for life.External links
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