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Post date: April 24 2003

States Settle Case With Leading Tax Preparation Firm

Attorney General Spitzer today announced that his office has settled a case with one of the nation's leading tax preparation firms that will provide up to $1 million in refunds to thousands of consumers across the nation.

H&R Block Services, Inc. of Missouri settled allegations made by 41 states concerning its "Peace of Mind" guarantee. Under the guarantee, the company agreed to pay any additional income tax owed up to $5,000 due to a preparer's error.

The investigation into H&R Block, led by New York, Ohio, California and Georgia concluded that for tax season 2001, H&R Block automatically added a $22 fee for "Peace of Mind" to all consumer tax return preparation invoices without first obtaining the consumer's affirmative acceptance of the guarantee and its fee.

"Consumers should be permitted to choose whether they wish to contract for additional services associated with additional fees," Spitzer said.

The agreement requires H&R Block to establish a fund of $1 million to be utilized to pay refunds to eligible consumers who had a tax return prepared at an H&R Block office in tax season 2001. To be eligible, consumers must have been charged for the guarantee as an additional component, never have utilized the guarantee and believe that they were never informed that the guarantee was added for a fee to their tax preparation service.

It is estimated that approximately 163,000 consumers across the nation paid a fee for the "Peace of Mind" guarantee.

Under the terms of the settlement, H&R Block will seek the consumer's affirmative consent before charging for the guarantee in the future. In addition, the tax preparation firm may not make a representation that it "recommends" purchasing the guarantee until the customer has been provided with the material terms and conditions of the guarantee.

H&R Block will pay $100,000 to New York State to cover the costs of its investigation.

As required by the terms of the settlement, H&R Block has set up a toll-fee phone number, (866) 522-7083 for consumers to file claims.

Joining New York State in settling the case with H&R Block are: Alabama; Alaska; Arizona; Arkansas; California; Colorado; Delaware; Florida; Georgia; Hawaii; Idaho; Illinois; Indiana; Iowa; Kansas; Kentucky; Louisiana; Maryland; Massachusetts; Michigan; Mississippi; Montana; Nevada; New Jersey; New Mexico; North Carolina; North Dakota; Ohio; Oregon, Pennsylvania; Rhode Island; South Dakota; Tennessee; Texas; Vermont; Virginia; Washington; West Virginia; Wisconsin; Wyoming; and the Corporation Counsel of the District of Columbia.

This case was handled for New York State by Assistant Attorney General Shirley Stark of the Consumer Frauds and Protection Bureau.