H&R Block Helped Shape Obamacare, Now Set For Gigantic Payday

rpollock Reporter
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Get your billions back, America! (And give a bunch of it to H&R Block.)

Five years ago, a bevy of high-priced H&R Block lobbyists worked on the tax preparation company’s behalf to shape the Affordable Care Act.

And this April 15, those efforts are set to pay off in a big way for the company.

H&R Block is well positioned to earn more than $100 million in additional fees from low-income Obamacare enrollees as they face the daunting challenge to properly file this year’s complicated health-related tax forms.

Consumers are familiar with H&R Block’s massive “Get Your Billions Back” ad campaign that includes direct appeals to Obamacare recipients who will have to file health information on this year’s IRS tax forms.


Reached by The Daily Caller, H&R Block refused to discuss the lobbying role it played in 2009 and 2010 — when many special interests were working behind the scenes to shape important elements of the health-care law.

The company has admitted Obamacare will impose major changes on taxpayers, stating in a Jan. 5 press release that the health-care law had produced “the biggest tax code change in the last 20 years.”

H&R Block’s decision to seek windfall profits from the Obamacare law also has riled some of its competitors, which are instead providing free help to low-income enrollees in filling out the complex tax forms.

Ryan Ellis, the tax policy director at Americans for Tax Reform and a former H&R Block senior preparer told TheDC that the company hopes to profit from the plight of Obamacare enrollees and those without health insurance who, for the first time, will have to file special tax forms related to their health-care coverage.

Ellis said the Obamacare participants are the “real target audience. It’s an alignment of interest.”

Ellis noted that H&R Block’s profits would easily exceed the fees it collects from Obamacare tax forms.

“You’re not just preparing their ACA [Obamacare] forms, you’re preparing their entire tax form,” he told TheDC.

Gil Luria, the managing director of Wedbush, a Los Angeles-based securities and investment firm, agrees Obamacare will give H&R Block a revenue bounce.

H&R’s added Obamacare consumer traffic is really the “key topic” for H&R Block’s bottom line, according to Luria. Luria estimates the company will realize up to $104 million in new revenue from its existing client base because of Obamacare.

“This will help H&R’s growth and profitability because they’ll be able to charge all these consumers for more services, for more filing of forms,” he told TheDC in an interview.

“In addition they may get some new filers that ordinarily would have done taxes themselves because those filers will be uncomfortable doing taxes on their own” with the new health-care requirements in place, he said.

A number of tax-preparation companies are shunning H&R Block’s practice of charging extra fees for filling out the complex IRS Obamacare forms.

“We don’t think people should have to pay extra for ACA-related forms,” Debra Hammer, a senior healthcare communications manager at Intuit, told TheDC.

Intuit is H&R Block’s main competitor with its online tax software TurboTax. Hammers said TurboTax has 30 million online users, about 60 percent of the online tax preparation market.

It appears H&R Block was the only tax-preparation company to lobby for the Democrats’ health reform push, according to lobbying reports.

In fact, H&R was the sole tax-preparation firm to also work on the Affordable Health Choices Act, a radical bill that proposed a “single-payer plan” of government-run health insurance.

The single-payer plan failed, but H&R Block went on to lobby for the successfully passed Affordable Care Act, today known as Obamacare.

Prior to 2008, H&R Block’s lobbying budget was relatively modest, hovering at around $80,000 annually. In 2006, the company paid nothing for outside lobbying firms.

In 2009, however, H&R Block’s spending on outside lobbying fees escalated to $1.7 million, according to data compiled by the non-partisan Center for Responsive Politics.

In 2010, its lobbying expenses rose to nearly $2 million, where they remain today.

H&R Block’s entire lobbying group was comprised of six separate lobbying firms involving 29 individual lobbyists, including Democratic super lobbyist Tony Podesta and his group — though there’s no public evidence Podesta’s firm lobbied for the Affordable Care Act on H&R Block’s behalf.

H&R Block lobbyists were seasoned tax policy veterans from both major political parties.

Twenty-five of the 29 had previously held government jobs, according to the Center for Responsive Politics.

Next to the Podesta Group, H&R Block’s second-highest paid lobbying firm was Capitol Tax Partners, a highly touted lobbying team with Democratic and Republican tax policy veterans. Capitol Tax Partners did work to shape Obamacare on behalf of H&R Block, according to public disclosures.

Capitol Tax Partners was led by Jonathan Talisman, a former assistant secretary for tax policy in the Clinton administration’s Treasury Department.

Talisman founded Capitol Tax Partners with Lindsay Hooper, a former Senate finance committee aide to former Republican Sen. Malcolm Wallop. Talisman was considered one of the most influential tax advisers to President Clinton.

Talisman “directly advised the President, the Secretary of the Treasury and other senior administration officials on matters of tax policy and legislative strategy,” according to his biography on the Capital Tax Partners’ web site.

In 2012, Tax Analysts named Talisman and Hooper as two of the five top tax lobbyists in Washington.

Official lobbying disclosure data shows H&R Block’s tilt toward Democrats became most pronounced in 2009 when President Obama assumed office.

Between 2008 and 2010, the firm’s PAC and individuals gave twice as much money to Democrats as to Republicans, according to data from the Center for Responsive Politics.

In 2008 alone, one out of every four of H&R Block’s PAC dollars went to Democratic Sen. Max Baucus, who was then the chairman of the Senate finance committee, and the official author of Obamacare.

Jessi Dolmage, a spokeswoman for TaxAct — a competitor to H&R Block — told TheDC that the majority of H&R Block’s customer base consists of working people who use the company’s retail outlets.

“Their customer base is largely retail,” she told TheDC, adding, “a lot of the people who are going to the retail offices are lower income.”

Eighty percent of Obamacare’s customers are working poor who are eligible for government subsidies, meaning their earnings hover at or near the federal poverty level.

Ellis says the health law as written may serve as a “tipping point” to attract new customers to the H&R Block retail empire.

“You go from getting zero dollars from that person to $200 to $300 per person. With a couple of million people, you’re talking about real money,” he said.

H&R Block’s 2014 annual report explicitly says that Obamacare will be good for the company’s bottom line.

“And finally, we made progress this year in our Health Care initiatives, demonstrating our expertise by providing a tax and health care review for our clients on the upcoming changes resulting from the Affordable Care Act,” according to the annual report.

“These efforts have positioned us well as the opportunity associated with the Affordable Care Act unfolds and becomes clearer,” the company stated.

H&R Block president Bill Cobb suggested last month in an interview with Reuters the company could charge as much as $5 to $30 per Obamacare form.

One industry executive, speaking anonymously, told TheDC that H&R Block will charge $21.95 for Obamacare customers who seek tax help at one of its 12,000 retail offices.

Luria told TheDC the average cost would be about $25.

In his Feb. 5 report, Luria said new Obamacare revenue is one reason for his “outperform” rating for H&R Block.

“We expect HRB to outperform this tax season as ACA complexity and refund eligibility adds incremental volumes in the paid preparer channel,” Luria publicly wrote.