Skip to main content

City Attorney Hydee Feldstein Soto Announces $1.6 Million Settlement with H&R Block, Providing Restitution for Eligible California Customers

Posted on 01/29/2024

LOS ANGELES - Today, the first day of the 2024 tax season, City Attorney Hydee Feldstein Soto announced that her office has settled a civil enforcement action against HRB Digital LLC and HRB Tax Group, Inc. (collectively “H&R Block”), operators of the online tax preparation and filing products offered under the H&R Block brand. Under the settlement, up to $1.6 million in restitution will be provided to tens of thousands of California customers who unfairly paid H&R Block to file their federal tax returns when they were eligible to file their returns for free.

The City Attorney’s Office filed this lawsuit in 2019, alleging that H&R Block engaged in a wide range of fraudulent, deceptive and unfair business practices. The suit claims that H&R Block steered Free File-eligible consumers to H&R Block’s paid online commercial products (e.g., by telling eligible  consumers they “needed” to purchase a paid product to file their returns) and suppressed consumer access to the H&R Block Free File product. 

“With tax filing season starting today, this settlement is a reminder that millions of taxpayers are eligible to file their federal tax returns free of charge,” said Hydee Feldstein Soto, LA City Attorney. “My office will always work to protect California consumers and I am pleased to be able to return $1.6 million to people who shouldn’t have paid for a free service.”

Since 2003, the IRS’s Free File program has allowed lower-income Americans to prepare and file their federal tax returns for free, but it is used minimally. According to some reports, 70% of taxpayers were eligible in 2022 - more than 110 million people - but only 2% filed their federal returns under the IRS program. The City Attorney’s lawsuit contended that this low rate of use was caused, in part, by the fraudulent, unfair and deceptive practices employed by H&R Block.

A third party administrator will contact customers who are eligible to receive restitution to notify them about this settlement and discuss their options for receiving payment.

City Attorney Feldstein Soto reminds taxpayers that for 2023, if their adjusted gross income is $79,000 or less, they are eligible to use IRS Free File for their federal tax return. More information about using this free service is available from the IRS. For state tax returns in California, the Franchise Tax Board also offers free options to eligible filers.

This litigation was managed by attorneys in the Public Rights Branch of the City Attorney's Office.  The Public Rights Branch brings civil enforcement actions in the name of the People of the State of California, seeking to vindicate public rights related to many areas, including unlawful, fraudulent, or unfair business practices, consumer protection, environmental justice, nuisance abatement, and intellectual property.

LA Superior Court Civil Case No. 19STCV15742
The People of the State of California v. HRB Digital LLC, et al. Proposed Stipulated Judgment