Washington (March 27, 2003) -- Consumer groups wrote the Treasury Department warning that commercial tax preparers participating in the IRS Free File program, like H&R Block, are using confidential taxpayer information to market financial products and services to consumers.

The letter cited H&R Block's Web site, which touts not only tax-related products, but "potentially subprime mortgages" as well.  H&R Block owns both H&R Block Mortgage and Option One, one of the nation's largest subprime lenders.

The letter urges Treasury to prohibit commercial tax preparers from using the Free File program to market financial products and services to taxpayers, including mortgages and high cost refund anticipation loans.  The letter also urges Treasury to close a loophole in its regulations that permits tax preparers to use confidential tax information for cross-marketing.

According to a Treasury spokesperson, the Free File agreement "requires industry members to protect taxpayer privacy and confidentiality. Unauthorized use of taxpayer information is a criminal offense. We appreciate the comments we receive on the Free File initiative, take them seriously, and have asked the IRS to review them to ensure that there are no violations."

Block denies the charges. It says its offer through the Free File Alliance meets or exceeds all privacy and security requirements of the IRS and the Free File Alliance, as well as those mandated by the Gramm-Leach-Bliley Act. It makes free online filing available to some U.S. taxpayers, and no one is required to buy any product.

Block added that its offer through the Free File Alliance does not require clients to “waive IRS privacy protections” before accessing the free offer.  No qualifying client is prohibited from using H&R Block’s offer based on their consent or refusal to consent to receive marketing messages, and no client is required to purchase any product or service as a condition to use H&R Block’s free offer.

-- Electronic Accountant Newswire staff

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