H&R Block made it too difficult for taxpayers to opt out of more expensive tax preparation plans and deceived customers about what types of taxes could be paid for free, according to allegations in a new complaint from federal regulators.
The Federal Trade Commission said Friday that H&R Block’s HRB,
the online storage process has pressured users with tactics to make them pay more. If customers wanted to pay less, they would have to start the return process all over again, regulators say.
The allegations about complicated pricing tactics echo other allegations the FTC has made against Intuit INTU,
the creator of TurboTax.
Millions of Americans turn to these two companies every year to pay their taxes. Both companies dispute the FTC’s allegations.
The FTC’s administrative complaint, filed within the agency itself, alleges that H&R Block made it difficult for customers to downgrade to cheaper calling plans. According to regulators, customers who wanted to pay less should have contacted customer service directly. If someone downgraded their plan, H&R Block would delete the tax return information already entered.
“H&R Block enables consumers to switch to a less expensive do-it-yourself product through multiple mechanisms, while ensuring the preparation of accurate tax returns,” Dara Redler, chief legal officer at H&R Block, said in a statement.
“We believe we provide our clients with great value, unmatched tax expertise and fair, transparent pricing,” added Redler.
The complaint represents a new front in the FTC’s battle over tax preparation cost transparency.
FTC commissioners ruled last month that TurboTax had for years deceived people about what kind of returns it would provide for free. Intuit denies the allegations and said it will appeal the decision.
H&R Block and TurboTax both offer free tax preparation services, but both apply to a limited number of returns. TurboTax’s advertising now claims that its free edition applies to about 37% of taxpayers.
There are other ways to pay your taxes for free outside of these two commercial providers.
In one example, the IRS is launching a proof-of-concept test this filing season of its free Direct File platform. The platform, which can only support a limited number of tax scenarios, is slowing its rollout in 12 states.
Earlier this week, the IRS said it began opening up short periods of time in which people in eligible states could start paying taxes on the site. Wider availability is expected in mid-March.