By Eileen Buckley
Albany, NY – The nation's largest tax preparer has been slapped with a lawsuit.
New York State Attorney General Eliot Spitzer has filed a civil complaint against H & R Block over retirement accounts. Spitzer says he is suing the company for fraudulent marketing of IRAs. He says the company steered 500,000 clients -- including nearly 30,000 New Yorkers -- to invest in IRAs that had hidden fees and low interest rates. More than 150,000 H & R Block customers closed their accounts, only to find out they had to pay additional undisclosed fees, and nearly $6 million in tax penalties.
"Eighty-five percent had fees that were imposed that were greater than the interest they received," Spitzer said.
Spitzer said it is especially appalling because many of those hit the hardest were working families struggling to save.
"It is simple logic that had these investors been told about the fees, they would have been able to say this is not a product that is good for me," Spitzer said. "As important as it is to create savings opportunities for low income individuals, it is simply not fair or decent to encourage them to invest in a vehicle without telling them you will lose money year after year."
Company whistler blowers tipped off the state.
H&R Block issued an immediate and strong reply to Spitzer's attack, saying the company will "fight vigorously to defend the Express IRA product and ensure it remains available to our many clients who rely on it as a helpful savings option."
"Make no mistake, we believe in the Express IRA product and are proud of the opportunities it presents for our clients," said Chairman and CEO Mark A. Ernst.