HR Block 2016 Annual Report Download - page 11

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H&R Block, Inc. | 2016 Form 10-K 3
million tax returns were prepared by and through H&R Block during fiscal year 2016, compared to 20.6 million in 2015
and 20.8 million in 2014. Our U.S. tax returns prepared during the 2016 tax season, including those prepared by our
franchisees and through our DIY solutions, constituted approximately 14% of an Internal Revenue Service (IRS) estimate
of total individual income tax returns filed during the 2016 tax season, compared to approximately 15% in fiscal year
2015. See Item 7, under "Results of Operations," 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 2016 tax season, we, together with our franchisees, operated in 10,213 offices across the U.S.
at the peak of the tax season, compared to 10,286 in the prior year. A summary of our company-owned and franchise
offices is included in Item 7, under "Operating Statistics." Additional year-round tax support, planning, and business
accounting and advisory services are offered to clients in Block Advisors offices beginning in fiscal year 2016.
Franchises. We offer franchises as a way to expand our presence in certain geographic areas. 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 and ongoing 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 solutions.
Online Tax Services. We develop and market DIY online income tax preparation software. We offer a comprehensive
range of online tax services, including preparation of federal and state income tax returns, review of tax returns by a
tax professional, access to tax tips, advice and tax-related news, use of calculators for tax planning, error checking and
electronic filing. Our online software may be accessed through our website at www.hrblock.com.
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 $62,000 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.
We develop and offer applications for mobile devices which provide tax return preparation and related services
and products to clients, including online tax preparation and tools that complement our other tax preparation services
and products.
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.
OTHER OFFERINGS – In addition to our tax services and products, 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
Shield® (TIS), and, for our Canadian clients, a refund discount (Cash Back®) program. RTs, EAs and the H&R Block
Emerald Prepaid MasterCard® are offered through our relationship with BofI.
Refund Transfers. RTs enable clients to receive their tax refunds by their chosen method of disbursement and
include a feature enabling 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 a load 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