HR Block 2010 Annual Report Download - page 19

We sold 267 company-owned offices to franchisees in fiscal year 2010 and 76 offices in fiscal year 2009.
Additionally, we closed more than 1,700 offices in fiscal year 2010, including over 1,000 offices in Wal-Mart stores.
The acquisition of our last major independent franchise operator in fiscal year 2009 included a network of over
600 tax offices, nearly two-thirds of which converted to company-owned offices upon the closing of the
transaction, as reflected in the table above.
Offices in shared locations at April 30, 2010 consist primarily of offices in Sears stores operated as “H&R Block
at Sears.” The Sears license agreement expires in July 2010. Offices in shared locations at April 30, 2009 and 2008
included offices in Wal-Mart stores. The Wal-Mart agreement expired in May 2009.
SERVICE AND PRODUCT OFFERINGS –In addition to our retail offices, we offer a number of digital tax
preparation alternatives. By offering professional and do-it-yourself tax preparation options through multiple
channels, we seek to serve our clients in the manner they choose to be served.
We also offer clients a number of options for receiving their income tax refund, including a check directly from
the IRS, an electronic deposit directly to their bank account, a prepaid debit card, a RAC or a RAL.
Software Products. We develop and market H&R Block At Home
TM
income tax preparation software. H&R
Block At Home
TM
offers a simple step-by-step tax preparation interview, data imports from money management
software and tax preparation software, calculations, completion of the appropriate tax forms, error checking and
electronic filing. Our software products may be purchased through third-party retail stores, direct mail or online.
Online Tax Preparation. We offer a comprehensive range of online tax services, from tax advice to complete
professional and do-it-yourself tax return preparation and electronic filing, through our website at
www.hrblock.com. This website allows clients to prepare their federal and state income tax returns using the
H&R Block At Home
TM
Online Tax Program, access tax tips, advice and tax-related news and use calculators for tax
planning.
We participate in the Free File Alliance (FFA). This alliance was created by the tax return preparation industry
and the IRS, and allows qualified filers with adjusted gross incomes less than $57,000 to prepare and file their
federal return online at no charge. We feel this program provides a valuable public service and increases our
visibility with new clients, while also providing an opportunity to offer our state return preparation and other
services to these clients.
RALs. RALs are offered to our U.S. clients by a designated bank primarily through a contractual relationship with
HSBC Holdings plc (HSBC). An eligible, electronic filing client may apply for a RAL at one of our offices. After
meeting certain eligibility criteria, clients are offered the opportunity to apply for a loan from HSBC in amounts up to
$9,999 based on their anticipated federal income tax refund. We simultaneously transmit the income tax return
information to the IRS and the lending bank. Within a few days after the filing date, the client receives a check, direct
deposit or prepaid debit card in the amount of the loan, less the bank’s transaction fee, our tax return preparation fee
and other fees for client-selected services. Additionally, qualifying electronic filing clients are eligible to receive their
RAL proceeds, less applicable fees, in approximately one hour after electronic filing using the Instant Money service.
A RAL is repaid when the IRS directly deposits the participating client’s federal income tax refund into a designated
account at the lending bank. See related discussion in “Loan Participations” below.
RACs. Refund Anticipation Checks are offered to U.S. clients who would like to either: (1) receive their refund
faster and do not have a bank account for the IRS to direct deposit their refund; (2) have their tax preparation fees
paid directly out of their refund; or (3) receive their refund faster but do not qualify for a RAL under the existing
credit criteria. A RAC is not a loan and is provided through a contractual relationship with HSBC.
Peace of Mind (POM) Guarantee. The POM guarantee is offered to U.S. clients, in addition to our standard
guarantee, whereby we (1) represent our clients if audited by the IRS, and (2) assume the cost, subject to certain
limits, of additional taxes owed by a client resulting from errors attributable to one of our tax professionals’ work.
The POM program has a per client cumulative limit of $5,000 in additional taxes assessed with respect to the
federal, state and local tax returns we prepared for the taxable year covered by the program.
Emerald Advance Lines of Credit. Emerald Advance lines of credit are offered to clients in tax offices from
late November through early January, currently in an amount not to exceed $1,000. If the borrower meets certain
criteria as agreed in the loan terms, the line of credit can be increased and utilized year-round. These lines of credit
are offered by HRB Bank.
H&R Block Prepaid Emerald Mastercard».The H&R Block Prepaid Emerald MasterCard»allows a client to
receive a tax refund from the IRS directly on a prepaid debit card, or to direct RAL or RAC proceeds to the card to
avoid high-cost check-cashing fees. The card can be used for everyday purchases, bill payments and ATM
withdrawals anywhere MasterCard»is accepted. Additional funds can be added to the card account year-round
H&R BLOCK 2010 Form 10K 3