H&R Block Inc. (HRB), the tax preparer that has been struggling with a series of troubles in recent months, said Thursday it saw an 8.6 percent increase in the number of total tax clients served in the first half of March, the majority coming through digital channels.

In its latest update on this year's tax season, the Kansas City-based company said it saw a 58.4 percent increase in software sales and clients filing taxes online compared with the first half of March 2005. The number of clients coming into H&R Block's retail tax offices rose 1.1 percent for the period.

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The company reported $243.9 million in fees from its retail offices during the period, a 7.9 percent increase over the year-ago period. Average fees per client rose 6.7 percent to $160.91.

For the period from Jan. 1 to March 15, the company's total number of clients is mostly flat, rising 0.3 percent. Traffic in retail offices, which lost an estimated 250,000 customers because of computer glitches in early January, is still 3.3 percent behind last year's total. Digital clients are up 17.9 percent for the year.

Total revenue for the year to March 15 is $1.7 billion, 2.8 percent ahead of last year.

"We saw notable strength in both our retail and digital business during the first half of March," Mark Ernst, the company's chairman and chief executive, said in a news release. "Client demand for H&R Block's tax services and products continues to grow as we approach the last weeks of the tax filing season."

The results also suggest traffic hasn't been significantly affected by a rash of bad news affecting the company in recent months, including a lawsuit filed in mid-February by California Attorney General Bill Lockyer targeting H&R Block's marketing of refund anticipation loans and news the company made a $32 million mistake on its own state income taxes.

The report cuts off on March 15, the day New York Attorney General Eliot Spitzer filed a $250 million lawsuit against H&R Block, accusing the company of defrauding retirement account customers. The company has strongly denied Spitzer's claims.

H&R Block shares fell 15 cents, to close at $22.07 on the New York Stock Exchange. The stock has traded in a 52-week range of $19.80 to $30.

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