H&R Block Inc. prepared 6.1 percent fewer returns in the early part of the tax season than it did last year, the Kansas City-based company said Thursday.
The decline to 10.59 million returns filed for customers was felt across the board. H&R Block showed fewer assisted returns at company-owned and franchise stores, and fewer digital returns online and on its computer software.
A year ago, H&R Block had handled 11.28 million returns at this point in the tax season. Its total for both years is through Feb. 28.
“As I say every year, there’s a lot of the tax season left, and we are focused on delivering a strong second half,” CEO Bill Cobb said during a conference call with analysts. “The second half is where we really pick things up.”
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Last year, Block experienced a 4.1 percent decline in the number of tax returns it handled through February, though its digital tax business was up.
Among digital filers, more have turned this season to competitors’ products, H&R Block told analysts, in part because of TurboTax’s Absolute Zero offer, but TaxAct also gained a larger share of the do-it-yourself market.
Cobb said this season’s overall decline in early filings through Block reflected a continuing trend among taxpayers to file later in the tax season than in years past. The trend, he said, has been reinforced this year by tax industry and government steps to combat fraud, delayed refunds and the impact of the Affordable Care Act.
Tax forms taxpayers use to show that they have health care coverage have been delayed, and H&R Block said that may be delaying some filings.
Nationally, Americans filed 0.4 percent fewer returns through Feb. 26 this year than in a comparable period a year ago.
The 58.3 million tax returns is down from 58.5 million filed in the early part of the tax season last year, the Internal Revenue Service said.
Financially, H&R Block said it was collecting more revenues from each customer, on average. It attributed the increases to added products such as its Tax Identity Shield and Peace of Mind offerings, as well as higher prices.
H&R Block said it has been able to raise prices at roughly twice the rate of inflation.
Also Thursday, the company reported revenues of $474.5 million in the three months that ended Jan. 31, a $34.5 million or 6.8 percent decline from the same months a year earlier.
The company lost $81.7 million, or 35 cents a share, compared with a loss of $36.9 million, or 13 cents a share, in the quarter a year ago.
Block usually loses money in the quarter and reports the bulk of its revenues and all of its earnings during the height of the February, March and April tax season. Those months comprise the fourth quarter of the company’s fiscal year.
The IRS report also shows 1 percent fewer tax returns had been processed by Feb. 26 than on the comparable date a year ago.
Tax professionals, such as those at H&R Block, Jackson Hewitt, Liberty Tax and independent preparers, have handled a smaller share of electronically filed returns this year than last.
The IRS’s total so far this tax season was split nearly evenly between pros and do-it-yourself e-filers. A year ago, professionals accounted for 52 percent of e-filed returns through the late February date.
Do-it-yourself filers accounted for 27.37 million returns, or not quite half of e-filed returns, with tax professionals handling 27.71 million, the IRS said.