Thousands and thousands of H&R Block Inc. customers who banked on short-term loans supported by their speculated tax refunds will not be having that option in this year as federal regulators forced Block's banking partner to stop offering the loans.

H&R Block Inc., the largest U. S. tax preparer, revealed that it would not be in a position to fulfill its fiscal 2010 outlook as high levels of unemployment resulted in a drop in tax filings.

As a consequence, its shares registered a 3% fall in premarket trading at $19.13. The stock through the close on Tuesday was down 1.8% the past year.

American's largest tax preparer, H&R Block Inc., has posted a slimmer-than-expected loss for the current fiscal year's second-quarter, on the back of a better Tax Services segment results. A quarterly loss of $128.6 Million, or 38 cents per share, was posted, a substantial improvement from the $135.9 Million worth of loss posted for same period last year.

The biggest tax preparer in the US, H & R Block, has consented to a payment of $4.85 million to settle the early 2006 lawsuit filed by the California attorney general, Jerry Brown. The terms of the arrangement restricted to three years, a Block spokeswoman said the company’s statement about the settlement was being prepared.