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Class Calls H&R Block ‘Compliance Fee’ Bogus

KANSAS CITY, Mo. (CN) - H&R Block, which prepares one of every seven federal tax returns, charges customers a deceptive, and imaginary, "tax preparer compliance fee," a class action claims in Jackson County Court.

Lead plaintiff Manuel Lopez claims that H&R Block began charging its bogus compliance fee of $2 to $4 per return in the 2010 tax year.

"H&R Block represents that the compliance fee is charged in order to comply with IRS requirements," the complaint states. "In reality, the fee is not mandatory and is not charged by the IRS."

Lopez claims Block invented the fee just to pad its income.

"H&R Block represents that the 'Tax Preparer Compliance Fee' consists of costs incurred by H&R Block to comply with new U.S. tax preparation registration requirements,'" the complaint states. "However, the IRS does not mandate a compliance fee and does not charge any compliance fee or filing individual tax returns.

"H&R Block does not disclose that true nature of its compliance fee and it concealed the truth about the true nature of the fee in that it does not go directly to the IRS for compliance purposes.

"H&R Block fails to disclose to customers that no governmental entity or other party (including the IRS) requires that H&R Block charges its clients a compliance fee.

"H&R Block fails to disclose to customers that no governmental entity or other party (including the IRS) requires that H&R Block pay a fee for each tax return it files.

"As a result, H&R Block is surreptitiously inflating the price charged to customers for tax preparation services under the guise of a mandatory federal compliance system."

Lopez seeks disgorgement and class damages and punitive damages for violations of the Missouri Merchandising Practices Act and unjust enrichment, and wants Block enjoined from continuing its deceptive practices.

He is represented by Norman Siegel with Stueve Siegel Hanson.

H&R Block, the country's largest tax preparation business, prepares one in every seven federal returns, controls 18 percent of the market, and makes about $4 billion a year, according to the complaint.

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