updated 4/12/2006 7:37:23 PM ET 2006-04-12T23:37:23

H&R Block Inc. said it saw a 5.4 percent increase in the number of income tax customers during the second half of March, and estimated 30 percent of taxpayers had yet to file their income tax forms for the year.

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In its latest update on this year's tax season, the Kansas City-based company said it saw a 17.4 percent increase in software sales and clients filing taxes online during the second half of March compared with the same period a year ago. The number of clients coming into H&R Block's retail tax offices rose 3.4 percent for the period.

The company reported $251.3 million in fees from its retail offices during the period, a 10.6 percent increase over the year-ago period. Average fees per client rose 6.9 percent to $170.94.

For the month, the company said the number of clients was up 7 percent and fees were up 9.3 percent.

Mark Ernst, the company's chairman and chief executive, said in a statement that while last year's figures included an Easter holiday, "the gain exceeded our expectations."

He also said he expected larger numbers of customers up until April 18 — the tax deadline in some states this year — because so many taxpayers hadn't yet filed their taxes, according to the Internal Revenue Service.

For the period from Jan. 1 to March 31, the company's total number of clients rose 0.8 percent. Traffic in retail offices, which lost an estimated 250,000 customers because of computer glitches in early January, is still 2.6 percent behind last year's total. Digital clients are up 17.8 percent for the year.

Total revenue for the year to March 15 is about $2 billion, 3.7 percent ahead of last year.

The report begins on March 16, the day after New York Attorney General Eliot Spitzer filed a $250 million lawsuit against the company claiming it marketed individual retirement accounts, or IRAs, that often charged more in fees than they generated in interest, causing many customers to lose money.

H&R Block has denied the charges, saying Spitzer ignored information indicating clients saved money on their taxes because of the accounts.

The company released the numbers a week ahead of schedule and said it will post final income tax season figures on May 10.

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