H&R Block sues US Federal Trade Commission over tax ads probe
By Mike Scarcella
March 20 (Reuters) - H&R Block sued the U.S. Federal Trade Commission on Wednesday, seeking an order that could upend the agency’s case accusing the tax giant of misleading consumers about the scope of its free tax-filing services.
The lawsuit in Kansas City, Missouri federal court claims the FTC's use of internal administrative law judges to hear cases violates the U.S. Constitution.
The FTC last month accused H&R Block of deceiving customers with broad marketing for “free” online tax filing services that really only apply to simple returns. The agency also said H&R Block had unfairly deleted consumers’ tax data.
H&R Block has denied the FTC’s claims. A hearing before an administrative judge is set for Oct. 23.
Wednesday's lawsuit cites the power of U.S. presidents enshrined in the Constitution to remove "inferior officers." It says the FTC's internal judges are improperly insulated from that authority, and that the agency must abandon their use.
"The FTC could still vindicate its law-enforcement interests by conducting the adjudication itself," the lawsuit said.
Kansas City, Missouri-based H&R Block did not immediately respond to a request for comment, and neither did a representative for the FTC.
The FTC's administrative law judges preside over hearings and take evidence, and they issue findings that can be appealed to the full commission. The agency then hears arguments and issues a final order. Those decisions can be appealed to a U.S. court.
Federal agencies’ use of administrative law judges have been contested in other cases.
The U.S. Supreme Court in November heard a challenge to the U.S. Securities and Exchange Commission’s similar proceedings using administrative law judges.
The court’s ruling, expected by the end of June, could have broad consequences for such in-house agency tribunals.
The case is H&R Block et al v. Himes et al, U.S. District Court for the Western District of Missouri, No. 4:24-cv-00198-HFS. (Reporting by Mike Scarcella Editing by David Bario and David Gregorio)
