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Friday, February 24, 2006

H&R Block Messes Up Its Own Taxes

Hr_block_1 Interesting press release yesterday from H&R Block:

As part of its ongoing work to remediate control weaknesses in its corporate tax function, the company said that it will restate its results for fiscal years 2005 and 2004, as well as previously reported quarterly results for fiscal 2006. The restatement pertains principally to errors in determining the company’s state effective income tax rate, resulting in a cumulative understatement of its state income tax liability of approximately $32 million as of April 30, 2005. The company estimates that the restatement will result in a 7-cent decrease in earnings per share in fiscal 2005 and a 2-cent decrease in earnings per share in fiscal 2004.

Nice to see a company live up to its promise:  "[W]e ensure that you will benefit from every deduction and credit available to you. If you don't get the maximum refund you're entitled to on your taxes, then your tax preparation is FREE. This is our Maximum Refund Guarantee."  The media has poked fun at the world's leading tax preparation firm messing up its own taxes:

H&R Block Inc., which provides tax advice to millions of Americans, made an embarrassing confession on Thursday. It goofed on its own taxes.

H&R Block Inc., the company that helps millions of Americans complete tax returns, said late Thursday that it got its own taxes wrong in recent years.

(Hat Tip:  Bill Sjostrom.)

http://taxprof.typepad.com/taxprof_blog/2006/02/hr_block_cant_d.html

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Comments

Quite frankly, taxes are just too damn complicated. When you have a system in which there are exceptions to every exception you are going to get screw ups. I don't know if there is a fair-tax movement for corporations, but this movement demanding simplifying individual taxes is very persuasive.

Posted by: mike | Feb 24, 2006 7:26:57 AM

How did we get ourselves into a position where breaking the law is more or less inevitable, no matter how hard we try not to? Especially when the penalties for doing so are potentially horrible.

I agree, it's time for the Fair Tax.

Posted by: kate q | Feb 24, 2006 12:32:08 PM

I sort of feel sorry for these guys. I remember when Intel had a floating point math bug in their math coprocessor. Everyone got a laugh, and then we got on with it. Seems in the long run it never hurt Intel much. It was also good to see this didn't come out due to an external audit. They found it and corrected it fully knowing the risk. Kudos to them.

Posted by: Carol | Feb 27, 2006 8:23:00 PM

HRB did the right thing...they found an internal error and they fixed it...But read the information people...This was an interal accounting adjustment for state income tax liabilities...H&R Block DID NOT SCREW UP THEIR OWN TAXES ...Income tax returns and accounting for income taxes are 2 different things...

Posted by: Kim | Mar 16, 2006 7:49:08 PM