|Crackback Block |
Spitzer filing for a return from tax preparer
1. Block HeadsIf tax season gives you a sinking feeling, imagine what they're going through at H&R Block ( HRB).
This week New York state sued the tax preparer, accusing it of defrauding customers by
But slow is too kind a word to describe income growth in Block's Express IRA, Attorney General Eliot Spitzer says. "Customers were told that the IRA paid 'great rates' and was 'a better way to save,' but 85% of the customers who opened the accounts paid the company more in fees than they earned in interest," he said Wednesday. An Express IRA account opened with the $300 minimum can expect to earn about $3 a year in interest, Spitzer says. But then there's a $15 setup fee, a $15 re-contribution fee, a $25 account termination fee and around $20 in so-called tax complexity fees for IRA-related tax forms. One Albany resident has seen the account lose 12% of its value over four years, Spitzer says. "We have cooperated fully and provided volumes of data and detailed analyses to the Attorney General's office, but it has ignored all of the positives and has chosen to launch this attack," the Kansas City, Mo., company carps in response. "At a time when the country's personal savings rate has declined to minus 0.7%, we've helped 596,000 of our clients begin saving for their future." That's nice, though it's not quite as compelling as the defense offered up by H&R Block's Wall Street lawyer. Even if Express IRA customers got fleeced, suggests Robert Abrams of Stroock & Stroock & Lavan, they surely can't match H&R Block's own ineptitude. No, despite the ludicrous fees, "This effort has not created windfall profits for H&R Block," he says. "Indeed the company has lost money operating this program." Oh well, maybe they can write it off on their taxes. Dumb-o-Meter score: 93. Or maybe not, considering H&R Block's recent plan to restate earnings to fix a state tax error. To view Colin Barr's video take on H&R Block's entry in Five Dumbest this week,