HR Block 2015 Annual Report Download - page 10

H&R Block, Inc. | 2015 Form 10-K 3
between fiscal year 2013 and 2014 is primarily due to discontinuation of our free Federal 1040EZ promotion in virtually
all markets. In the U.S., 20.6 million tax returns were prepared by and through H&R Block during fiscal year 2015,
compared to 20.8 million in 2014 and 21.6 million in 2013. Our U.S. tax returns prepared during the 2015 tax season,
including those prepared by our franchisees and those prepared and filed at no charge, constituted approximately
15% of an Internal Revenue Service (IRS) estimate of total individual income tax returns filed during the 2015 tax
season. See Item 7, under "Tax Services," for further discussion of changes in the number of tax returns prepared.
ASSISTED – Assisted income tax return preparation and related services are provided by tax professionals via a
system of retail offices operated directly by us or our franchisees.
Offices. During the 2015 tax season, we, together with our franchisees, operated in 10,286 offices across the U.S.
at the peak of the tax season, compared to 10,378 in the prior year. A summary of our company-owned and franchise
offices is included in Item 7, under "Tax Services – Operating Statistics."
Franchises. We offer franchises as a way to expand our presence in certain markets. Our franchise arrangements
provide us with certain rights designed to protect our brand. Most of our franchisees receive, among other things,
the right to use our trademark and software, access to product offerings and expertise, signs, specialized forms,
advertising and initial training and advisory services. Our franchisees pay us approximately 30% of gross tax return
preparation and related service revenues as a franchise royalty in the U.S. Our franchise arrangements typically include
a ten year term and do not provide for automatic renewal.
From time to time, we have sold certain company-owned offices to existing franchisees or have acquired the assets
of existing franchisees and other tax return preparation businesses, and may continue to do so if future conditions
warrant and satisfactory terms can be negotiated.
DO-IT-YOURSELF – In addition to our retail offices, we offer a number of DIY tax preparation alternatives. By offering
professional assisted and DIY tax preparation options through multiple channels, we seek to serve our clients in the
manner they choose to be served.
Online Tax Services. We offer a comprehensive range of online tax services, from tax advice to complete professional
and DIY tax return preparation and electronic filing, through our website at www.hrblock.com. Services available at
this website allow clients to prepare their federal and state income tax returns using our online tax program, access
tax tips, advice and tax-related news, and use calculators for tax planning. We are a member of Free File, Inc., also
referred to as the Free File Alliance (FFA). This alliance was created by the tax return preparation industry and the IRS,
and allows qualified filers with an adjusted gross income of $60,000 or less to prepare and file their federal return
online at no charge. We believe this program provides a valuable public service and increases our visibility with new
clients, while also providing an opportunity to offer our state online tax services to these clients.
Desktop Software. We develop and market DIY desktop income tax preparation software. Our desktop software
offers a simple step-by-step tax preparation interview, data imports from money management software, calculations,
completion of the appropriate tax forms, error checking and electronic filing. Our desktop software may be purchased
online, through third-party retail stores or via direct mail.
Mobile Applications. We develop and offer applications for mobile devices which provide tax and related services
to clients, including online tax preparation and tools that complement our other tax preparation services and products.
OTHER OFFERINGS – In addition to our tax services, we also offer clients a number of additional services, including
refund transfers that include a fee deduction feature (RTs), H&R Block Emerald Advance® lines of credit (EAs), H&R
Block Emerald Prepaid MasterCard®, our Peace of Mind® Extended Service Plan (POM), Tax Identity ShieldSM (TIS),
and, for our Canadian clients, a refund discount (Cash Back®) program.
Refund Transfers. RTs, formerly known as refund anticipation checks (RACs), allow clients to receive their tax refunds
by their chosen method of disbursement and include a feature allowing clients to deduct tax preparation and service
fees from their tax refunds. Clients may choose to receive their RT proceeds by direct deposit to a deposit account,
by deposit to their H&R Block Emerald Prepaid MasterCard® or by receiving a check. RTs are available to U.S. clients
and are frequently obtained by those who (1) do not have bank accounts into which the IRS can direct deposit their
refunds; (2) like the convenience and benefits of a temporary account for receipt of their refund; or (3) prefer to have
their tax preparation fees paid directly out of their refunds. In fiscal year 2015, we also began offering a similar program
to our Canadian clients, under our Pay With RefundTM program.