H&R Block
From Wikipedia, the free encyclopedia
| It has been suggested that H&R Block Mount Holly District be merged into this article or section. (Discuss) |
| H&R Block, Inc. | |
|---|---|
| Image:HR Block logo.png | |
| Type | Public (NYSE: HRB) |
| Founded | Kansas City, Missouri USA, (1955) |
| Headquarters | Kansas City, Missouri USA |
| Key people | Alan. M. Bennett, Interim CEO, Richard Breeden, Chairman, Henry and Richard Bloch founders |
| Products | Banking Business Services Tax Preparation Investments |
| Revenue | Image:Red down.png$4.021 billion USD (2007) |
| Net income | Image:Green Arrow Up Darker.svg $374.3 million USD (2007) |
| Slogan | You Got People. |
| Website | www.hrblock.com |
H&R Block (NYSE: HRB) is the leading tax preparation company in the United States, and claims more than 22 million customers worldwide, with offices in Canada, Australia and the United Kingdom. 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 in Kansas City, Block today operates 12,500 retail tax offices in the U.S., plus another 1,400 abroad. Block also has operations in 1,500 shared locations at Wal-Mart, Sears and other stores.
Contents |
[edit] General information
The Bloch brothers, who started the current US$4 billion annual business from one newspaper ad, chose the spelling “Block” for their company name to avoid mispronunciations. The company's headquarters occupies an entire block at Main and 13th Streets in Kansas City. [1]Since its beginning, Block has prepared more than 400 million tax returns, and since 2000 has expanded its business to include banking, mortgage lending, consumer financial planning, and accounting and consulting services to mid-sized companies. Block’s businesses are:
- H&R Block Tax Services
- H&R Block Bank
- H&R Block Financial Advisors
- RSM McGladrey Business Solutions
In fiscal year 2007, Block reported revenue of US$4 billion and net income of US$374.3 million.[2] The company was ranked 467 in the Forbes 500 list of top U.S. companies in 2006.[3] In mid-2007, Block had market capitalization of $6.45 billion.[4]
Besides its walk-in tax preparation offices, Block provides its own consumer tax software called TaxCut, as well as online tax preparation and electronic filing from the H&R Block web site. The site also offers tax tips and calculators.
In addition, Block offers public tax preparation courses for basic and advanced students.
[edit] 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 US$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. He did. 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, the would-be buyers could not meet the asking price, so the parties agreed the Bloch brothers would get US$10,000, plus royalties from the tax operation. Thus, the first H&R Block franchise tax office was created. In the following years, H&R Block grew quickly, and went public in 1962. Block opened its first 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. 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. Beginning in the 1990s, the company began to expand into the financial services arena, offering mortgage, banking and business services.
[edit] Business Areas
[edit] Retail Tax Services
In May 2007, the company said its total U.S. clients served during the 2007 tax season reached a record 19.9 million, up 3.8 percent from the previous year period.[5] H&R Block employs 90,000 tax preparers. 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.
[edit] Digital Tax Services
H&R Block competes for a share of the digital market with its TaxCut Online Tax programs and TaxCut 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.
[edit] Tango
Tango by H&R Block includes integrated and continuous one-touch access to tax professionals, combined with a vertical, modern design for an animated, intuitive and interactive tax preparation experience. Tango creates a new category of aided online tax preparation, the first of its kind based on Don Norman’s concept of emotional design.
[edit] 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. Block has said that more than one-third of its clients have no banking services, and must pay high check-cashing fees for their paychecks, as well as tax refund checks. Bank customers can establish FDIC-insured accounts with their tax refund money and then access those funds with pre-paid "Emerald" Mastercards through a nationwide network of ATMs. The accounts also allow direct payroll deposits and clients can get traditional services, such as home mortgages, lines of credit and IRAs. Block Bank accounts are available only to the company's tax clients in Block offices. The bank is primarily an online operation, with one bricks-and-mortar office located in Kansas City.[6]
[edit] H&R Block Financial Advisors
Since 1971, H&R Block Financial Advisors has operated as a full-service securities broker-dealer and in 2007 was managing US$33 billion in assets. The unit offers investment planning, advice and related financial products and services. It employs 900 financial advisors in the U.S. Through HRBFA’s partnership with H&R Block Inc., the company shows clients how planning from a net tax perspective can help them accomplish financial goals, while minimizing the amount of money paid in taxes.
[edit] RSM McGladrey
RSM McGladrey Business Solutions was created in 1999 when H&R Block acquired the assets and business of McGladrey & Pullen, based in Bloomington, Minn. McGladrey has 100 offices in 25 states and offers accounting, consulting, tax services, and international business services to mid-sized companies. Its clients include business in the construction, health care and manufacturing industries. 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.[7]
[edit] Controversy
[edit] 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.[8] The company stated that it had "insufficient resources" to identify and report complex transactions in its corporate tax accounting.[9] On Feb. 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.[10]
[edit] Refund anticipation loans
On Feb. 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". The lawsuit is pending.[11]
While many cases against companies offering these types of loans have been thrown out in recent years, there have still been recent changes in the tax-loan industry.[12] For example, Chase bank is reducing their fees to as low as 1% of the loan for the 2008 filing season.[13] End-of-year paystub loans have almost completely been eliminated as they are often unable to be repaid when tax refunds are held for other debts. Also, much of the tax preparation industry have been required to present much more clearly stated, written agreements of the terms for loans, including a statement of the extrapolated APR if the loan were to be carried out for a year.
[edit] Express IRA
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. Spitzer alleged the company assessed fees that, in some cases, wiped out interest that account holders could earn. However, in July 2007, a New York state judge dismissed much of the lawsuit. 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.[14]
[edit] 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 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.[15]
[edit] Executive Resignation
On November 20, 2007, H&R Block announced that effective immediately Mark Ernst has resigned from his position as Chairman and CEO. He was replaced as chairman by Richard Breeden. Alan Bennett was named interim CEO. [1]
[edit] References
- ^ Google Maps
- ^ Associated Press
- ^ CNN Money
- ^ Yahoo! Finance
- ^ MarketWatch Report
- ^ Kansas City Business Journal
- ^ Hoover's Report
- ^ TodayInFinance
- ^ CNN Money
- ^ Fox News
- ^ Sacramento Business Journal
- ^ USA Today
- ^ Inside Indiana Business - Changes made to Refund Anticipation Loans
- ^ New York Times
- ^ USA Today
