H&R Block, the nation's largest preparer of income tax returns, has reached an agreement with the attorneys general in 41 states and the District of Columbia to reimburse certain Block customers who paid for a special insurance policy, the Peace of Mind, in connection with the preparation of their 2001 income tax returns.
Block offers the Peace of Mind program for taxpayers who want an additional level of protection beyond the standard service guarantee. Without paying any extra, Block customers receive a standard guarantee that the tax return prepared by a Block representative will be accurate. Block also will help a taxpayer answer any questions posed by the Internal Revenue Service with regard to a return prepared by Block. In addition, Block agrees to pay any interest and penalties owing as a result of a Block error in the preparation of the income tax return.
For taxpayers who want more than that standard guarantee, Block offers the Peace of Mind program. For taxpayers who purchase Peace of Mind at a fee of $27 (the fee was $22 in 2001, the year for which Peace of Mind refunds are being processed), Block will agree to pay not only penalties and interest on returns in which Block has made errors, but also additional taxes assessed by the IRS and state revenue agencies up to a total of $5,000, assuming the taxpayer provided the Block tax preparer with correct and accurate information.
The settlement, which totals $3.3 million, will be split $2.3 million among the 42 jurisdictions, and $1 million to a consumer fund for individual reimbursements. It is estimated that 163,000 people purchased the Peace of Mind plan in 2001. The entire $22 fee for the program will be reimbursed to Block customers from the $1 million consumer fund, unless more than 45,454 customers file claim requests, in which case the $1 million will be prorated among all of those who file requests and meet the eligibility requirements.
In 2001, according to the attorneys general, some Block tax preparers charged customers for the Peace of Mind program without their knowledge or consent. Customers who believe they were billed for the program in 2001 without their knowledge and who did not take advantage of the program can make a claim for a refund. Claims must be filed no later than August 24, 2003.
Refund claims can be made by telephone, at 1-866-522-6983, online at H&R Block's Web site, or by writing to:
Peace of Mind Refund
P.O. Box 300260
Kansas City, MO 64130
Going forward, Block has agreed to explain the terms and conditions of the Peace of Mind program and get an "affirmative agreement" from customers before assessing the fee for the program.