History

History

Learn more about H&R Block's co-founders Henry W. Bloch and Richard Bloch

The American Dream that Began on One Main Street Now Lives on Main Streets Everywhere

Main Street in Kansas City, Mo., stretches more than 70 blocks, from the riverfront through business districts and residential neighborhoods. On its 13^th block sits a 17-story office building. This glass structure, in customary green, welcomes visitors and employees to H&R Block's world headquarters.

It is here, perhaps, where co-founder Henry W. Bloch can best appreciate what he and his brother Richard accomplished. Their bookkeeping business started with one office - on Main Street even then – and little interest in doing taxes. Today, the company they built is the world's largest tax services company, serving 23 million clients in fiscal year 2010 at more than 11,000 company-owned and franchise retail locations, and through digital tax solutions. What happened in between is a success story marked by tenacity, persistence and a vision of the American Dream.

A Bomber, a Library, an Idea

Henry and Richard were born and raised in Kansas City, the second and third sons of a prominent Kansas City lawyer. Henry graduated from the University of Michigan, while Richard graduated from the Wharton School of Finance at the University of Pennsylvania. Their older brother Leon studied law at the University of Missouri-Columbia. During Henry's junior year, the Japanese bombed Pearl Harbor and he enlisted in the Army Air Corps, which eventually sent him to Harvard Business School to study for a military career. While there, a chance visit to the library played a pivotal role in the birth of the brothers' business.

"I always wanted to do something different, something more than just a job, something to contribute to society," Henry recalls. "And my brothers and I were always thinking up different businesses we could start, but none of them felt right. Then one day I saw a little pamphlet in the Harvard library that gave me the idea we were looking for."

The "little pamphlet" was a copy of a speech a Harvard professor had delivered to a group of insurance men. The professor said there were three kinds of business: big, small and labor. "Big business and labor were both very powerful, but small business really had no one to turn to," he said, "and small business was really the backbone of this country. The future," he declared, "would be in helping small businesses."

Henry excitedly wrote to his brothers about his vision of providing temporary workers, plus accounting, collection and management services for small businesses. The full list included well over 100 services - even income tax preparation.

Henry worked as a stockbroker briefly after he got out of the Air Force. Then, with a $5,000 loan from his aunt, 24-year-old Henry rented a storeroom office on Main Street for $50 a month and opened United Business Company. Working with his brother Leon, Henry landed a bookkeeping assignment for a hamburger stand eight blocks south of the office. More accounts followed and the business grew. Eventually, Leon returned to law school and Richard became Henry's partner.

Luck Favors the Prepared - and the Preparers

Business thrived and the company grew into bigger office spaces up and down Main Street. In 1954, United Business Company's 12 employees were keeping books for various clients, and Henry and Richard were working seven days a week, long into each night - something had to give. This also was the year the basic tax code the IRS still uses was introduced.

"We had been doing taxes for a guy named John White who worked in display advertising at 'The Kansas City Star," Henry recalls. "We told him we couldn't keep doing his taxes because we were too busy with our other work. But he suggested, "Why don't you really try making a business out of taxes before you get out entirely?"

So John White went back to The Star and had a small ad made up that showed a man behind an eight ball, with a simple headline: Taxes, $5. He convinced the Blochs to run the ad twice. The first day the ad ran, Henry was out visiting customers when he got a message to call his office. Richard answered breathlessly.

"Hank, get back here as quick as you can," he said. "We've got an office full of people!"

Until the mid-1950s, the Internal Revenue Service filled out tax returns at no charge for taxpayers who went to their local IRS office. Errors were common and when people complained, the IRS began eliminating the service. Later, Henry learned just how well-timed their ad was: The Blochs' first ad appeared at the same time Kansas Citizens were discovering the IRS would no longer do their tax returns.

H&R Block is Born

On Jan. 25, 1955, Henry and Richard replaced United Business Company with a new firm that specialized exclusively in income tax return preparation: H&R Block Inc. Within weeks, the company grossed nearly a third of the annual volume United Business Company had taken years to develop. The IRS also was about to stop filling out taxpayers' forms in New York, so H&R Block opened seven offices there in 1956.

A year later, H&R Block began opening franchise offices and H&R Block doors swung open on Main Streets across the country. The company went public Feb. 13, 1962, with a $300,000 offering - 75,000 shares at $4 per share. H&R Block became listed on the New York Stock Exchange in 1969. Two years later, having survived lung cancer, Richard decided to retire and devote his time to supporting cancer research and education.

By 1978, H&R Block offices prepared more than one out of every nine tax returns filed in the United States. In a 1986 test with the IRS, H&R Block filed 22,000 returns electronically from two cities. The test was a success: Electronic filing significantly reduced the amount of time a taxpayer waited to receive a refund. More than a decade later, H&R Block's trademarked "Rapid Refund" service had become synonymous with electronic filing.

H&R Block Today

In 1998, H&R Block began building a distribution channel under the RSM McGladrey brand to deliver tax, accounting and business consulting services to privately held, mid-sized companies, along with wealth management services for business owners.

In September 2000, Henry retired as chairman and assumed the title of honorary chairman.

In 2006, the company opened H&R Block Bank, a federal savings bank and member FDIC. During the 2007 tax season, the bank launched the H&R Block Emerald Prepaid MasterCard as a way to introduce many of its tax clients to traditional financial services and products. The bank opened more than 2 million prepaid debit card accounts its first year.

Americans continue to look to H&R Block as an affordable - and approachable - tax and financial partner. Henry and Richard founded the company on a culture of providing superior customer service and on a pledge to stand behind their work. Today, the company remains committed to these tenets and to serving clients in the manner in which they prefer - in a retail office, using digital tax solutions or both.