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Tax Changes Would Hurt Block

One of the changes backed by the Senate Finance Committee would require the Internal Revenue Service to make it possible within three years for individual taxpayers to file electronic returns without buying commercial software or paying a professional preparer.
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The other would in effect bar Block or any other tax service from offering what are known as refund anticipation loans to clients who want tax refund money back faster than the IRS can deliver it.
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Tax service profits and revenues account for more than half the earnings that Kansas City-based Block reports each year and nearly all the business done by its two largest rivals, Jackson Hewitt Tax Service Inc. of Parsippany, N.J., and Liberty Tax Service of Virginia Beach, Va.
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Block released a two-sentence statement Thursday [June 29] that said: "The Senate measure contains many positives for taxpayers, including the certification of tax professionals, which we support. H&R Block looks forward to additional discussions around other provisions of the bill."
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"}jR"umV Company executives could not be reached for further comment. Jackson Hewitt and Liberty executives did not return numerous phone calls Thursday.
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9cY2P{%H'f-E ``e The proposals are part of a larger package of tax changes that must be passed by the full Congress and signed by President Bush before they become law. Consumer groups such as the Consumer Federation of America and the National Consumer Law Center have pushed for both changes on behalf of low- and moderate-income taxpayers. V2y9lzV u
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Lawmakers previously prohibited the IRS from setting up a free electronic filing program in competition with the major preparers and thousands of individual tax professionals who offer similar services. Congress and the IRS instead organized what is called the Free File Alliance of private companies, including Block, to offer free filing to qualified taxpayers. Hz*OZX
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The service began in 2003, and proved wildly popular with taxpayers a year ago. That's when the IRS received more electronic returns than paper ones for the first time. The free filing service proved less popular this past filing season, when the participating companies restricted its usage to households with incomes of $50,000 or less. 5oo`(B$AU)E~:Ct.z

z_{ O4A1]{x}'dl)Hh Proponents of more widely available free electronic filing, including Sen. Max Baucus, a Montana Democrat, say that free electronic filing should be available to everyone. %W[+[ sE
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Critics of the idea, such as Tim Hugo, the Free File Alliance's executive director, say taxpayers won't be comfortable with the idea of the IRS potentially preparing tax returns as well as collecting them. Q P P+~,Eu$C)w9AC5i

0E/h2dz-LE~T -- GENE MEYER (Kansas City Star)