HR Block 2005 Annual Report Download - page 65

Kiplinger’s Home and Business Attorney and Kiplinger’s software units sold, online completed and paid federal returns
WILLPowerSM software products. and paid online state returns when no federal return was
TaxCut offers a simple step-by-step tax preparation interview, purchased, as well as taxpayers for whom we provided only paid
data imports from money management software and tax electronic filing services. Returns for our U.S. clients constituted
preparation software, calculations, completion of the appropriate 15.5% of an IRS estimate of total individual income tax returns
tax forms, checking for errors and, for an additional charge, filed as of April 29, 2005, compared to 15.7% in 2004 and 16.0%
electronic filing. in 2003.
H&R Block DeductionPro helps taxpayers track and accurately OWNED AND FRANCHISED OFFICES ⬎⬎⬎ A summary of our
value their charitable deductions by providing fair-market company-owned and franchise offices is as follows:
valuations for hundreds of commonly donated household goods. April 30, 2005 2004 2003
ONLINE TAX PREPARATION ⬎⬎⬎ We offer a comprehensive U.S. OFFICES ⬎⬎⬎
range of tax services and products, from tax advice to complete Company-owned offices 5,811 5,172 4,688
professional and do-it-yourself tax return preparation and Company-owned shared locations (1) 1,296 996 607
electronic filing, through our website at www.hrblock.com and Total company-owned offices 7,107 6,168 5,295
www.taxcut.com. These websites allow clients to prepare their Franchise offices 3,528 3,418 3,967
federal and state income tax returns using the Online Tax Franchise shared locations (1) 526 323 95
Program (‘‘OTP’’), access tax tips, advice and tax-related news Total franchise offices 4,054 3,741 4,062
and use calculators for tax planning.
11,161 9,909 9,357
Beginning with the fiscal year 2003 tax season, we participated
INTERNATIONAL OFFICES ⬎⬎⬎
in the Free File Alliance (‘‘FFA’’). This alliance was created by the
Canada 912 891 910
tax return preparation industry and the IRS, and allows filers to Australia 378 378 362
prepare and file their federal return online at no charge. We feel Other 10 76
that this program increases our visibility with new clients, while
1,300 1,276 1,278
also providing an opportunity to offer our state return
preparation services to these new clients at our regular prices. (1) Shared locations include offices located within Wal-Mart, Sears or other third-party
CASHBACK PROGRAM ⬎⬎⬎ We offer a refund discount businesses.
(‘‘CashBack’’) program to our customers in Canada. Canadian law
Offices in shared locations include 947 offices operated in Wal-
specifies the procedures we must follow in conducting the
Mart stores and 757 offices in Sears stores operated as ‘‘H&R
program. In accordance with current Canadian regulations, if a
Block at Sears.’’ The Wal-Mart agreement is in the process of
customer’s tax return indicates the customer is entitled to a tax
being extended, with the new agreement expected to expire in
refund, we issue a check to the client. The client assigns to us the
May 2007, and the Sears license agreement expires in July 2007,
full amount of the tax refund to be issued by Revenue Canada and
both subject to termination rights.
the refund check is then sent by Revenue Canada directly to us.
We offer franchises as a way to expand our presence in the
In accordance with the law, the discount is deemed to include
market. Our franchise arrangements provide us with certain
both the tax return preparation fee and the fee for tax refund
rights which are designed to protect our brand. Most of our
discounting. This program is financed by short-term borrowings.
franchisees receive signs, designated equipment, specialized
The number of returns discounted under the CashBack program
forms, local advertising, initial training, and supervisory services,
in fiscal year 2005 was approximately 581,000, compared to
and pay us a percentage of gross tax return preparation and
552,000 in 2004 and 531,000 in 2003. See discussion of the
related service revenues as a franchise royalty.
Canadian tax season extension under ‘‘Seasonality of Business.’’
From time to time, we have acquired the territories of existing
CLIENTS SERVED ⬎⬎⬎ We, together with our franchisees,
franchisees and other tax return preparation businesses, and will
served approximately 21.4 million clients worldwide during fiscal
continue to do so if future conditions warrant and satisfactory
year 2005, compared to 21.6 million in 2004 and 21.7 in 2003. See
terms can be negotiated. During fiscal year 2004, we made
discussion of the Canadian tax season extension under
payments of $243.2 million related to the acquisition of primarily
‘‘Seasonality of Business.’’ We served 19.1 million clients in the
assets and stock in the franchise territories of ten of our former
U.S. during fiscal year 2005, compared to 19.3 million in 2004 and
major franchisees. One franchisee is continuing litigation
19.5 million in 2003. ‘‘Clients served’’ includes taxpayers for
whom we prepared income tax returns in offices, federal
H&R BLOCK 2005 Form 10K
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