H&R Block, the nation’s second largest paid tax preparer, is currently under fire for lobbying to make it harder for taxpayers to apply for the Earned Income Tax Credit (EITC), which is considered an important tool for lifting working Americans out of poverty. Specifically, the company pushed for the Internal Revenue Service (IRS) to significantly increase the number of questions self-filers have to answer in order to claim the credit, most of which paid preparers are already required to answer. But what may be more egregious is just how they lobbied for this change.

Traditional methods, like hiring lobbyists to meet with lawmakers and regulators and making campaign contributions through political action committees, can be tracked through required public disclosure reports. H&R Block’s strategy, though, is much harder for the public to detect.  The company’s government relations team works to turn the company’s franchisees and associates into a grassroots lobbying force.

The company, which spent $2.19 million lobbying in 2014 and has already spent more than $1 million in 2015, used a multi-pronged strategy as it sought to change the EITC application process.  It made its case in letters to Congress and IRS officials as well as during hearings where the company’s CEO testified. In addition, H&R Block’s PAC ingratiated itself with members of Congress, contributing $148,000 to federal candidates in 2014 and $42,500 to candidates in 2015 so far. 

In March 2015, H&R Block brought seventeen franchisees to Washington to talk to members of Congress, specifically targeting members of the House Ways and Means Committee and the Senate Finance Committee. In all, the franchisees participated in more than 40 meetings with lawmakers on Capitol Hill. The changes to EITC eligibility paperwork was one of the policies these grassroots corporate lobbyists pushed.

The company also uses visits to its corporate offices to its advantage. H&R Block hosted Reps. Jason Smith (R-MO) and Ann Wagner (R-MO) at headquarters in Kansas City, MO, in February 2015. During the visit, company representatives apparently spoke to them about increasing EITC eligibility questions for self-filers, bragging in an internal newsletter that they had conveyed “a message that the members took back with them to Washington.” H&R Block’s PAC contributed $1,000 to Rep. Smith’s campaign in March 2015. Soon after, during a House Ways and Means Committee hearing, Rep. Smith questioned IRS Commissioner John Koskinen about the EITC issue, asking, “Why don’t you begin to address the problem immediately through just form changes you control to bring the same scrutiny of eligibility to all filing methods?”

The lobbying effort worked. The Senate Appropriations Committee passed a funding bill in July that encourages the Treasury Department to “ensure that the same eligibility questions are being asked of taxpayers whether they are preparing their returns with a paid tax preparer or via do-it-yourself methods.” The legislation also calls for self-filers to answer more questions to claim other tax credits, including the Child Tax Credit and the American Opportunity Tax Credit. The effect, according to critics, is that many filers will either give up in their efforts to claim the tax credit or will turn to preparers like H&R Block for help. The company denies that the push to change EITC filing requirements is about “competitive business interests,” arguing instead it is about reducing fraud.  They did, however, brag to their employees that their efforts with Rep. Smith had “great results for advancing our policy priorities in Washington, DC.”

H&R Block is by no means unique in its efforts to leverage its employees to push the company’s policy agenda. The “fly-in” is a regular part of the interest group game in Washington after all. But the tax preparer’s multi-pronged lobbying strategy highlights how corporate influence efforts often go beyond what’s reported in campaign finance and lobbying reports. 

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