H And R Block
The Kansas City, Mo.-based company also offers banking, personal finance and business consulting services.
Founded in 1955 by brothers Henry W. and Richard Bloch, Block today operates 12,500 retail tax offices in the United States, plus another 1,400 abroad.
In addition to Block's retail stores, they offer their own consumer tax software called TaxCut, as well as online tax preparation and electronic filing from their website.
In fiscal year 2007, Block reported revenue of $4 billion and net income of $374.3 million. The company was ranked 467 in the Forbes 500 list of top U.S. companies in 2006. In mid-2007, Block had market capitalization of $6.45 billion.
By early 2008, Block's market capitalization decreased to $6.06 billion, and the company was ranked number 1461 in the Forbes Global 2000. In the fiscal year ended 04/30/2008, Block reported revenues of $4.4 billion and a net loss of $308.6 million.
History
During World War II, Henry Bloch was a young Air Force navigator who wanted to start a family business with his brothers in Kansas City.
Home from the war in 1946, Henry saw a pamphlet suggesting a bright future for companies serving small businesses, and it fired his imagination. That year, Henry and his older brother, Leon, borrowed $5,000 and opened a small bookkeeping business on Main Street in downtown Kansas City.
However, four months later, they had few clients and Leon decided to seek a law degree.
Henry wanted to keep trying with the fledgling business and placed a newspaper ad for help-wanted. He got an unexpected response--from his mother--who proposed that Henry hire his younger brother, Richard, for the job.
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 Blochs 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. 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.
For the next 20 years, the company became identified with Henry Bloch's simple, direct Midwestern style and his focus on personal integrity and commitment to clients.
By 1986, Block was handling more than 10 million tax returns each year and had opened offices in Canada and Australia. Beginning in the 1990s, the company began to expand into the financial services arena, offering mortgage, banking and business services.
Business areas
Retail tax services
In May 2007, the company said its total U.S.
The company reported that in 2007, its tax clients obtained US$30 billion in tax refunds, credits and other government benefits. The company said it filed US$10 billion worth of Earned Income Tax Credits for its low-income clients.
Quality of Service
While all H&R Block tax professionals are required to have both extensive initial training and yearly updates as well as being strongly encouraged to participate in advanced seminars to expand their tax knowledge base, the quality of service at an H&R Block office can be hit and miss.
There are some offices and some preparers that are as close to flawless as you can get in the income tax return preparation business. There are also some offices that are only open only during the tax season (January 2 through April 15) which may be inconvenient for the client unless the district office is close by and adequately staffed during the off season and there are some tax professionals who have tax knowledge but not people skills leaving the client with a less than pleasant experience.
If a client of any tax service feels uncomfortable about the quality of service they are receiving, they should ask to speak with the office manager.
Digital tax services
H&R Block competes for a share of the digital market with its online tax programs and software. Block's other digital offerings include H&R Block Signature, where clients enter their information and do their returns online and a Block tax professional reviews, edits, signs and e-files the return; and, Block Online Office, where clients enter their information on a questionnaire, submit it online and a Block preparer works up their tax return and files it.
H&R Block issued refunds and provided alternative tax filing services free of charge to customers impacted by this problem.
2008/11 - This project has been officially discontinued.
H&R Block Bank
The H&R Block Bank was chartered in 2006 and offers low-cost services to its low- to moderate-income customers. The bank is primarily an online operation, with one bricks-and-mortar office located in Kansas City.
Financial advisors
Since 1971, H&R Block Financial Advisors has operated as a full-service securities broker-dealer and in 2007 was managing $33 billion in assets.
Through an alliance with McGladrey & Pullen and other accountancies, the Block subsidiary operates in 70 countries under the RSM International name. RSM has an alternative practice structure with McGladrey & Pullen.
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. The company stated that it had "insufficient resources" to identify and report complex transactions in its corporate tax accounting. On Feb.
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.
Refund anticipation loans
On Feb. 15, 2006, California Attorney General Bill Lockyer sued H&R Block, alleging the company's refund anticipation loan 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. In addition, H&R Block will pay $500,000 in penalties and $1.9 million in fees and costs.
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.
Social Security numbers
In December 2005, H&R Block sent its customers free copies of its TaxCut software, but the mailing labels on the packages mistakenly included the recipients' Social Security numbers. 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.
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