updated 3/16/2006 6:15:38 PM ET 2006-03-16T23:15:38

H&R Block Inc. said Thursday it saw fewer tax clients in February but still posted a slight increase in revenue.

Major Market Indices

The nation’s largest tax preparer said 5.9 million customers came into H&R Block offices last month, down 5.1 percent from the same period a year ago. The number was offset, however, by a 27.4 percent jump in customers doing their taxes online or with the company’s TaxCut software.

While the number of clients using H&R Block’s offices is diminishing, the average fees per client increased 6.3 percent in February to $154.22.

That helped the company generate $915.4 million in fees, up 1 percent from a year ago.

For the year, H&R Block has seen 12.1 million clients, 4.4 percent fewer than at this point last year. Overall revenues, however, are up 2 percent at $1.49 billion.

The lower client figures come after H&R Block added 1,004 offices and department store kiosks for this tax season. But the figures indicate that H&R Block’s client numbers might actually be ahead of last year if not for a series of technical problems in early January that officials estimate forced 250,000 clients to have their taxes done elsewhere.

On Wednesday, New York state filed a $250 million fraud lawsuit against H&R Block, claiming the company steered more than 500,000 customers into a money-losing retirement account plan.

H&R Block defended the plan and said it would fight to see that it remains available to its clients “who rely on it as a helpful savings option.”

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