Michael Cohn for Accounting Today writes: A federal court has denied H&R Block’s effort to stop Intuit from continuing to air a pair of TV commercials for TurboTax that comically suggested tax prep franchise employees worked as plumbers and clothing store clerks outside of tax season.
The U.S. District Court for the Western District of Missouri ruled against Kansas City, Mo.-based H&R Block’s attempt to pull the TurboTax ads off the air. Three divisions of Block had filed suit last week against the ads. In one ad, a shopper in a women’s clothing department is greeted affectionately by a store employee who remembers doing her taxes the previous week.
In the other ad, a plumber who is fixing a family’s kitchen sink reminds them that he prepared their tax return. The commercials don’t mention H&R Block by name, but Intuit contrasts the lack of experience needed at “major tax stores” to its own staff, saying it hires only CPAs, Enrolled Agents and tax attorneys to provide tax advice to customers.
H&R Block CEO Bill Cobb took particular umbrage at the ads, writing emails to employees and franchise owners as well as an open letter to clients.
“TurboTax is trying to promote itself on the backs of our tax professionals, misusing our nearly 60-year-old brand and taking cheap shots at hardworking plumbers and retail sales clerks, not to mention millions of Americans holding down two jobs,” Cobb wrote in his open letter. “We say no way—not on our watch. I am incredibly proud of our tax professionals, who for nearly six decades have built the H&R Block brand, anchored by trust, and I will not let them be tarnished by some overzealous marketing campaign.”
He pointed out that Block has over 7,000 Enrolled Agents, more than any other tax preparation company, and at its tax offices, the average client is served by a tax professional with over a decade of experience and hundreds of hours of training. He also noted that Block’s independent research and analysis advisory group, The Tax Institute, is staffed primarily by CPAs, tax attorneys, Enrolled Agents and former IRS agents.
“We sign and stand behind every return we prepare for our clients in our offices,” said Cobb. “Since 1955, we have prepared and signed more than 500 million tax returns in our offices. TurboTax has prepared and signed zero.”
Intuit greeted the court decision allowing it to continue airing the commercials. “We are very pleased with today’s decision and will continue to vigorously defend these truthful
ads,” said Dan Maurer, general manager and senior vice president of Intuit’s Consumer Tax Group, in a statement. “These two TurboTax advertisements factually and accurately portray the tax expertise of TurboTax experts, who are all CPAs, IRS Enrolled Agents and tax attorneys. This stands in sharp contrast to the prior tax experience of some of those who major tax stores advertise for and hire. While experience may vary at tax stores, the truth is, major tax stores actively advertise for and hire tax preparers who have no prior tax experience. It is unfortunate, but not surprising, that H&R Block doesn’t want taxpayers to know this. As a consumer-focused company, we want to ensure U.S. taxpayers get the facts so they can make an informed choice for their tax preparation needs.
“In the last three years, H&R Block has spent hundreds of millions of dollars in advertising trying to convince the American public that they need to go to a tax store to have their return prepared,” Maurer added. “The fact is, more and more Americans choose to do their own taxes with TurboTax to get their maximum refund possible and save more of their hard-earned money. Last year alone, more than 25 million people used TurboTax including nurses, teachers, firefighters, U.S. service men and women and people from every walk of life. More Americans trusted their federal returns to TurboTax last year than to H&R Block stores and all other major tax stores combined. We urge taxpayers to take another look at who is preparing their tax return at the major tax stores.”
ExactCPA Commentary: Best part of the article? The 20 comments that followed. Not surprising to tax professionals however if you are not a tax professional...this is "must read material" to gain a slight glimpse on the inside of both H&R Block and Turbo Tax and illustrates why you want to have a CPA prepare your taxes.
20 Comments
HEHEHHEHE! And just now saw the ad H&R put out saying they sign their own returns and Turbotax doesn't! Let the slugfest begin!
Posted by: andystaxes | January 31, 2013 9:59 PM
My opinion is that no matter who you are or where you work or how you got your training you can either be highly competent or highly incompetent and then there's everything in between. I got my start at H&R Block and have since worked in large firms and small firms. BIG DIFFERENCE among those situations. H&R Block has no business suing anyone considering all the false advertising that they do....at least I consider it false advertising....like the one where the woman claims she's read all 900 pages of the American Recovery Act. Yeah...right....like anyone/everyone has time to read 900 pages of anything let alone something regarding one subject matter.
And Intuit's comical commercials if they are specifically about Block, are no less than truthful - based on my past experience. As I recall, Block particularly geared itself toward people who were looking for "something else to do"....my words - not theirs. By this I took it to mean if you have another career but wanted something to fall back on or something to do in your spare time, learning taxes at Block was a good idea.
As far as I'm concerned, most of the preparers actually DO know what they're doing but there is a significant minority who do not - giving all of them a bad name. The COMPANY is the problem. How can you do tax preparation operating on a sales model?? As many former Block employees can attest to, those of us who are "real" preparers often had to contend with "co-workers" who accused us of "stealing clients". No quality preparation when clients are scheduled back to back and preparers have to operate on commissions.
Posted by: andystaxes | January 31, 2013 5:29 PM
I've been preparing tax returns for 37 years, and I couldn't begin to tell you how many H&R Block AND Turbotax returns I've had to correct.
I'll tell you the main problem with Block, as I see it. Some of the preparers, especially the franchise owners, do a good job. They jack the fees up, and they used to sweeten that by taking the fees out of RAL proceeds. BUT: the seasonal people they hire find out to their sorrow that they're not getting a wage, they are getting a "draw", and they have to justify that draw by a certain percentage of the work they turn out. They may or may not get a bonus at the end of tax season. So. What do they do? Why, they churn those returns out so fast it would make your head swim. A person who gets their return done at a certain office can't be sure their preparer will be there even the next year.
Turbotax is even more of a problem. People feel confident using it, but there are so many ways they can mess up or not get all the deductions they're entitled to. My professional tax software costs $3000 per year, and Intuit owns the company. Kind of strange they market the very thing that gives us pros more work, huh?
Posted by: MizLiz | January 31, 2013 5:15 PM
I would like to know HOW Intuit software can advertise the help from the EAs and CPAs???? Since all of us have to sign the returns we prepare just how do your sign a return that is being prepared on a home computer????? I have wondered every since I got the first job offer letter from Intuit.
I really think it is high time the IRS enforces the rules about who must sign the return with Intuit. ---Another class action suit?
I agree with the above. I am from Montana and have heard Federal Energy credit= State Energy credit, even though the rules are quite different. The state is aware of this and they go into the automatic audit bin!!!!
Posted by: Beckyspen | January 31, 2013 5:06 PM
Everyone is missing the point. It's not the competency of HR Block that is necessarily the issue. The issue is that they charge low income/elderly tax payers exorbitant fees for very minor tax services. I have seen bills for hundreds of dollars (!) for returns that consisted of w-2's and 1099G's. It is absolutely inappropriate and their claim that tax returns are free is criminally misleading. If you have a state return and/or EIC, you will be charged. I could care less about HR's whining and am happy that they are challenged in the free market!
Posted by: Acctngful | January 31, 2013 2:22 PM
I started out in the tax prep business by taking the H&R Block course. I worked for H&R Block for several tax seasons preparing returns, teaching the basic course and running an office. By and large, their basic course is good (or was 30 years ago, but that was before computers). The problem is that you don't have to do all that well to pass and be hired by Block. They have good preparers and they have bad preparers. Standards vary widely, depending on the district and whether or not the location is company owned or a franchise. The real problem with Block is that their fees have become outrageous. In our area, it's cheaper to go to a CPA than to Block, but most people don't know that. Since working for Block, I went back to school and got a BS is accounting. Honestly, the Block course was more comprehensive than the college course. Truth is, CPA's are only required to take 6 hours of taxation (3 in personal and 3 in business). Being a CPA or an attorney is no guarantee that you know taxation, but most who specialize in taxes know their stuff.
As far as TurboTax, how many people are actually going to call for help? How many that do call will hang up, waiting on call to speak to someone? And, by the way, have you seen what TurboTax charges for their software? How much are you really saving by doing it yourself? No one at TurboTax is going to sign the return as a paid preparer. Tax software can be tricky. Each program has its quirks. You have to know what you're doing. There is no substitute for knowledge. If you don't have it, find someone who does.
Posted by: dbaeder | January 31, 2013 2:05 PM
I am entering my 31st tax season after graduating from college with an accounting degree. I have done my share of correcting both H&R Block and Turbotax returns. My advice to those going to any of the Big 3 tax prep offices....buy the insurance or peace of mind guarantee, because odds are, your preparer has not had enough training or experience to even ask you the right questions. If you buy the program and self-prepare your return, and your reasoning for doing this is because it is cheaper than getting a professional, good luck to you. If your return involves any of a number of complexities that you do incorrectly, you may discover that you are penny-wise and pound foolish, and land yourself in the crosshairs of the IRS.
Posted by: billmedlik | January 31, 2013 1:09 PM
H&R should be more concerned about the tack its advertising is taking. I am seeing more and more advertisements getting closer and closer to promising prospective clients refunds and that is unethical and could, worst-case scenario, put them out of business.
Posted by: pusherman | January 31, 2013 1:05 PM
Back in 2005 or 2006, I went to H&R Block for a 6 weeks basic training course. I was surprise to see the instructor on the final walk around the room and tell people their answers were wrong and to change them. Some of the people at the end of the course could not tell you what an exemption was. They half came to class anyway. I was truly shocked and disappointed that H&R Block had people with this little experience filing someone taxes. I lost confidence in Block after that. They are only hired for 3 weeks or so which is peak season for simple returns but something still can be missed or screwed up in 3 weeks.
Posted by: born2win | January 31, 2013 12:36 PM
While I agree with "shopfreeinc", not having a client audited is not quite a mark of distinction. maay audits are because of unusual situations and/or large "legitimate" expenses. Being "aggressive, but legal" is not wrong. A professional knows where the line is.
Of course, audits due to "cheating" and/or "stupidity" are something else.
Posted by: tego@verizon.net | January 31, 2013 12:35 PM
I totally agree with what everyone has said. I worked for H & R Block for 8 years. I took hundreds of courses on my own because they are a little lacking in their basic course. I have my own business now and know my limitations. I have prepared hundreds of returns and have not had one client get audited. I don't know everything there is to know but then again nobody does. If they claim they do their lying. I study hard and if I don't know something I research it until I am sure. It is a shame that people don't understand that doing taxes online that is not just a w-2 and going to these major chains does them a great injustice. I hope people in today's financial climate go to someone who knows what they are doing because the alternative is dire.
Posted by: shopfreeinc | January 31, 2013 12:08 PM
I do agree with Intiut, and to be honest, they are telling the truth, I worked with a major tax preperation company for eight years, their traning is so week, we learn how to input data in the system.. I have started my own and took classes, other than I am an MBA holder... Huge difference between what I know now, and knew before..
Go for it INTUIT...atleast your software do check errors...LOL
Posted by: hjubran | January 31, 2013 11:31 AM
I actually prepare tax returns for a two H & R Block employees. While they are well meaning, and have taken H&R training,which seems to be fairly comprehensive they do have other employment, and not one of them is employed as an accountant, financial manager, or tax preparer other than with Block. According to their stories, the site managers are also not trained tax professionals, but serve more to schedule clients and monitor the hours of the employees. One of topics of discussion when I am preparing their taxes, is 'why do you think that you can take this as a deduction? If you do take it, you will be in trouble with the IRS.'
When I see the H & R advertisements, I chuckle, as I know that what they portray is actually the truth.
Posted by: mhjacobson | January 31, 2013 10:58 AM
Ditto to the other CPAs seeing a LOT of Turbo-Tax prepared returns that were materially wrong since the non-experienced individual who didn't understand the implications of a simple process of checking a box or not on their computer screen.
I just had another couple come in the other day. They had over $30k every year of self-employed income from commissions for up-selling manufacturer's products. They called them "spiffs" and just reported them as "other income" not checking the box that it was self-employed income. In talking with them, it was apparent that it was an honest mistake. They really didn't understand the definition of self-employed income.
Net result, they underpaid their taxes by about $15,000 over the last 3 years! (As well as shorted their Social Security Earnings for future benefit computations.)
Posted by: kbullis@gbis.com | January 31, 2013 10:48 AM
I have an MSA and an MTax, and have been volunteering my time each spring via a free VITA program. I cannot tell you how many people come to our site loaded down with penalties and interest, never to see another refund again due to these "so called" professionals at these franchise companies. Why? Because of the lure of getting their money immediately (which is false, after taking their cut, you are lucky to see 50% of your return) these unsuspecting people allow for the filing of grossly inaccurate returns, only to have these franchises claim "the entry on the tax return was what the taxpayer told me." YOU (preparer) are the professional, YOU are suppossed to know better!! But, they don't! And yes, the ususpecting poor suffer.
Posted by: sakramchak | January 31, 2013 10:45 AM
I'm a CPA tax with 17 years of tax preparation experience and I correct more H&R Block and turbo tax returns every tax season. They are only good in my opinion for a basic W-2 return and nothing more. It's the public's own fault for choosing to use either and not hire a CPA for tax preparation.
Last year a new client of mine who used Turbo Tax for an adoption credit checked the wrong box on his return, his refundable credit of $11,000 was held up for 2 years. It was not until he came to my office where I corrected the error and had to take it to an appeals conference that he finally received his check. No more turbo tax ever was his final response, lesson learned.
Posted by: samantha h | January 31, 2013 10:42 AM
As a 30 year tax preparer, I can assure you I have seen numerous major errors in returns prepared by H & R Block preparers. The most recent was seeing "hobby losses" deducted on schedule A along with "investmentt expenses" of over $40,000 for the down payment on rental property. On another year return for the same client the H & R Block employee deducted the rental expenses on the schedule C against other non rental income, only to show the rental income on schedule E without any deductions. Hire a professional.
Posted by: tommynthomas | January 31, 2013 9:26 AM
Apparently what goes around comes around. Now H&R knows what it is like to be on the other side of negative advertising.
Posted by: Joseph D | January 31, 2013 8:22 AM
I am a CPA and have been self-employed since 1984, when I left my job as controller for a major retail chain.
I have lost track of how many clients I have had come into my office with the IRS and/or New York State Tax and Finance on their heels because of tax returns that they prepared themselves using this software.
In my opinion, H & R Block should stick to short forms and refund anticipation loans. I have also had many taxpayers come into my office after going to an IRS audit with the preparer from H & R Block as their representative. They all tell the same story - " the entry on the tax return was what the taxpayer told me" - no preparation prior to audit, no attempt to obtain possible documentation prior to the audit, actually taking the tax payer to the audit instead of obtaining POA etc.
Posted by: pencilpusher11530 | January 31, 2013 8:08 AM
For an individual experienced in preparing their own tax returns, Intuit's Turbotax may be beneficial. But, for the majority of people inexperienced in tax preparation, and think TurboTax is a cost-effective alternative, they are in for a rude awakening - Turbotax is a trap for the unwary. This year alone, I have had more people come into my office with thousands of dollars in penalties for having taken improper deductions they were seemingly allowed through TurboTax, then ever before. Had they had the chance to meet with an experienced Tax Professional, it would have easily been avoided.
Only in today's world would a company like Intuit poke fun at H&R Block tax professionals who perform tax work as a side job to help support their family.
For background, I was offered a position as an Intuit Tax Expert while I was completing my Master's in Tax and completed 1-day of training before resigning. The people in the training group were nothing more than out-of-work customer service representatives with little to no real-world tax experience.
Posted by: admin@GoldingTaxSolutions.com | January 30, 2013 11:17 PM
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