H&R Block Taxcut



A recent security fraud class action suit is one of several saying H&R Block (no relation to Mike Block) did not disclose over 20 class action lawsuits, for $2 billion, in which it charged such interest. The potential liability was far more than the net worth of H&R and the fees were more than half of company income. So many class action suits involve H&R that I have a Google link to them. The N.Y. Times mentions an undisclosed 49.9999999 percent interest in loans, when 50 percent violates anti-collusion rules. It writes of interest rates of more than 500 percent, roughly what Mafia loan sharks charge their best customers [per the NY Times]. It also writes H&R got secret kickbacks from banks until 1997, when a court forced fine print disclosure by ruling hidden payments could violate commercial bribery statutes. The disclosure type seems smaller than the TurboTax box activation disclosure. The article says loans were 5.5% of profits, so the above link may include related fees. It also says a judge ruled an H&R lawyer engaged in patently deceptive and manipulative conduct that obstructed judicial proceedings. The cheap settlement the article mentions was later thrown out.

A complete discussion is Tax Preparers Peddle High Priced Tax Refund Loans: Millions Skimmed From The Working Poor And The U.S. Treasury (29 highly footnoted pages), from the Consumer Federation of America and the National Consumer Law Center. It says refund anticipation loans (RALs) are usurious short-term loans secured by tax refunds, with costs of up to 774% APR. It says consumers do not realize that electronic filing alone cuts the wait to about 10 days, provided they have a bank account for refund direct deposit. Their average low income worker has a $1,600 refund and pays $267 for a loan fee, electronic filing fee, check cashing fee and $85 return preparation fee, for a total of $994 million. In 2001 Block filed 16.4 million returns, 14.5 electronically, with 4.5 million RALs. Average RAL users have $10,000 - $15,000 in annual income, are unemployed or in service occupations and have less than a high school education. 50% do not know they are getting a loan. There is a long discussion of how RALs use IRS and bank loopholes to possibly legally charge otherwise criminally usurious interest rates, but the U.S. Congress may have given states the right to protect their consumers.

There should be no exemption from the fraud charges in these lawsuits. Even if many claims are barred by the statute of limitations, dividing $2,000,000,000 by $267 per person involves 7.5 million transactions that are or should be criminal. If taxpayers are not suing for return preparation fees, then there may have been 11 million such transactions since 1992. H&R increased stock value 79% in 5 years. To me it now looks like this was the result of operating an organized criminal conspiracy, preying on those least able to wait for refunds.

TaxCut has many more bugs than TurboTax. TurboTax has about 70% of the personal tax market, leaving TaxCut, Tax Act and others 30%. If TaxCut has a 17.5% market share, it has about a fourth the users of TurboTax. The Google Advanced Group Search indexes web newsgroups. Most TaxCut and TurboTax posts are in alt.comp.software.financial.quicken. A recent search for bugs + TaxCut showed 49 bug threads there since December 1, 2002. The search also showed 36 TurboTax bugs threads (36% less). Note, this is simplistic because it counts a TurboTax bug post that mentions TaxCut as a bug for both and there certainly may be duplicate posts. Some TurboTax verified bugs, related to C-Dilla, were due to not updating Windows. Some TurboTax bugs also relate to TurboTax being more complex. That is why I believed that adjusting TaxCut to 198 bugs, based on the number of users (4 times), understated the relative TaxCut bugs at the time of the year when I first wrote this. However, a test on 2/10/03 showed only 59 bug threads for Tax Cut versus 46 for TurboTax, so TaxCut may have only 28% more bugs than TurboTax. Of course, some may post simply to affect these results.

TaxCut is adware or spyware. According to the top Google Links, Adware or Spyware are programs given away to get contact or tracking data. TaxCut sells user contact data, except for a probable few users who opt out. TaxCut is now available free, so getting such data and H&R Block (no relation to Mike Block) customers must be its main spyware basis. TurboTax sells no user data because it more highly values users and Federal Privacy Laws covering software publishers. TurboTax does not require personal data when activates and it only transmits data when efiling. This relates to why TurboTax has copy protection and TaxCut does not. Why copy protect something with so little value you give it away?

TaxCut has no professional tax program. This may relate to lack of knowledgeable people or reputation. The experience and code base a company like Intuit gains from its professional tax program often results in better retail tax programs. H&R Block (no relation to Mike Block) also gave up on its Managing Your Money financial program.

Microsoft pulled its tax program before its first April 15 and a Profit financial program. It also dropped support for 300+ other programs (see Microsoft Discontinued Product Support List). It recently paid $1.5 billion for giant company financial programs, but neither Microsoft nor H&R have expertise in a QuickBooks level upgrade. Microsoft gave us the type of copy protection we dislike in TurboTax. Its stock rose only 19% in 5 years.

I stick with Intuit because of it strong customer oriented principles. I stick because Intuit has a 20 year track record in its field and because its explosion of QuickBooks integrated programs show that the best is definitely yet to come. Most of all I will stick with Intuit because I, and others who bother to Contact Intuit, know its top executives are once again quickly answering us and making big changes at all hours of the day and night. That is why its stock rose 132% in 5 years, due to increased investor confidence and the ability to invest ever larger amounts in continuing to quickly and easily revolutionize how individuals and small businesses manage our financial affairs.