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H&R Block history of innovation, began with its 1955 founding, continues today

6 min read

6 min read

February 08, 2018

H&R Block

In 1955, when brothers Henry and Richard Bloch advertised tax preparation services their company United Business Services offered as a courtesy to their business clients, they stumbled into a need. By offering tax preparation services they would more than triple their revenue in just a year, launch one of the most recognized brands in the country and birth an industry. If that weren’t enough for these Kansas City entrepreneurs, their company, which would become H&R Block after that first tax season in 1955, has continued to spur innovations in tax, business and technology in its 63-year history.

1956: H&R Block creates franchise model

After their success providing tax preparation services in Kansas City, where the IRS had recently discontinued its free tax preparation services for taxpayers, H&R Block opened offices in New York, the next city scheduled to lose free tax preparation services from the IRS.

With alternating two-week schedules, Henry and Richard shared responsibilities for the New York offices. However, both had families and neither wanted to relocate to New York, so they eventually decided to sell the operations there. Two CPAs wanted to buy the New York business, but could not meet the asking price. Instead, the CPAs agreed to pay the Blochs $10,000 along with royalties. The franchise model and the H&R Block franchise network were born.

1986: Already using computers to complete tax returns, H&R Block helps the IRS test e-filing

In the 1980s, H&R Block began using computers to complete tax returns. In 1980, the company acquired CompuServe, a move that helped H&R Block grow and keep its 8,676 offices connected.

David Platt, who bought his H&R Block franchise in 1975, recalled that when H&R Block introduced computers to his tax office, he thought, “If they don’t work, we’ll just push them aside and do taxes the way we’ve always done them.” But today, Platt says, “I wouldn’t let them go.”

Computers and his tax knowledge allow him to work “what if” scenarios with his clients and talk about the impact life changes have on their taxes.

“In the 70’s when a client wanted to talk about what might happen in their life, we were completing entire forms for each scenario. Today, we can have endless conversations with clients about their possible life changes and tax impacts.”

Because of this expertise and the capital investment to equip offices with computers, H&R Block could help the IRS test e-filing pilot programs in Cincinnati and Phoenix.

The e-file pilot program required tax preparers to call an IRS office in Cincinnati. An IRS employee there would plug the phone into the Mitron, transfer the information from the Mitron to another machine known as a Zilog, which would convert the data into files the IRS system could read. Finally, the IRS would transmit the data back to the tax preparer through another phone call and connection to a modem in the tax preparer’s office.

In the pilot year, the IRS processed 25,000 e-filed returns in this way. The IRS currently processes more than 100 million e-filed returns annually (no Mitron or Zilog needed).

“Our early experiments with computers and e-filing did more than help the IRS build a more secure, faster way to process returns. We ultimately delivered a better tax preparation experience for our clients,” said Platt.

2004: H&R Block gives DIYers a way to get the “best of both” methods of tax preparation

By 2004, taxpayers had been going to H&R Block for almost half a century and using H&R Block tax software to do their own taxes for more than a decade. In 2004, H&R Block introduced a new tax preparation method combining the hands-on convenience and value of DIY tax prep with the confidence and accuracy that comes from review by an H&R Block tax professional. The new filing method, known as “Signature,” would become “Best of Both” in 2010 and “H&R Block Tax Pro Review” in 2018.

“Our ability to combine DIY tax prep and end-to-end reviews of returns by H&R Block tax experts has become so popular that some competitors are trying to replicate our process,” said Kerri Jones, director of digital at H&R Block. “However, we’ve got more than 80,000 tax professionals and more than six decades of helping clients do their taxes their way that gives H&R Block clients an unfair advantage that we feel no other company can offer.”

2017: H&R Block introduces augmented intelligence at the tax desk in IBM Watson

In 2017, H&R Block introduced IBM Watson to taxpayers filing their 2016 tax returns. The technology helped deliver the best outcome for each unique tax situation, and with a dedicated monitor for the client, made the in-office experience more engaging and transparent for clients who wanted to better understand their tax situation.

“We help taxpayers get their taxes done the way they want. For our clients who come in an office we have created an experience that allows them to be involved in the process and better understand their tax situation and make sure they’re getting every credit and deduction,” said Meg Sutton, director of client experience at H&R Block. “H&R Block with Watson turns our 600 million data points and 60 years of tax expertise into a personalized tax preparation experience that is accessible and understandable – an experience you won’t get anywhere else.”

The collaboration between H&R Block and IBM was the first time Watson was applied to tax preparation, enabling millions of filers to benefit from the industry-leading expertise of H&R Block’s tax professionals, who partner with Watson to improve the client experience and aid in identifying credits and deductions.

2018: Virtual tax prep experience gives taxpayers tax office support without the office visit

New for the 2018 tax season, H&R Block Tax Pro Go is another new method of tax preparation that will help people who want the benefits of assisted tax preparation without the office visit. H&R Block Tax Pro Go enables clients to get their taxes prepared and filed by a tax professional based on the information they provide online. An H&R Block-certified tax professional will prepare a client’s tax return, sign and submit it to the IRS after it has been approved by the client. Clients will know their price upfront, starting at less than $60 for one federal and one state return.

“There’s always more we can do to serve the client. We’ve been getting taxpayers their maximum refund for the better part of a century. But in those 60 years, we’ve also been making the tax preparation experience better for everyone,” said Sutton. “It’s exciting to think of what we’ll do next.”

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