H&R Block Inc. said that a miscalculation of its own state taxes will cost the company about $32 million in back taxes.
The tax prep giant said that it had underestimated its own state effective income tax rate in previous quarters stretching back into 2004 reported earnings. It's the second public tax gaffe in recent memory for Block, which said in an August 2005 filing with the Securities and Exchange Commission that it had overstated net income for 2003 and 2004 by $91.1 million, due mostly to accounting errors.
In worse news, the company also said its third-quarter net earnings for the fiscal year fell 69 percent to $28.8 million, down from $92.3 million a year ago. Revenues for the quarter did rise 12 percent, to $1.2 billion.
The company blamed a slower start to the tax-filing season than in previous years, but did say that it had contributed to the problem by introducing a new technology that sent an estimated 250,000 customers to rivals. Block introduced a new software distribution system in January that caused persistent glitches, leaving some offices unable to process taxes.
Block also said that some of its third-quarter woes resulted from legal settlement costs related to its early refund program.
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