Kansas City, Mo ? H&R Block Inc. has agreed to pay $3.3 million to settle a dispute with attorneys general for 41 states and the District of Columbia over whether the tax preparer obtained its clients’ consent before charging them for an accuracy guarantee.

Under the settlement announced Thursday, $2.3 million will be divided among the 41 states, including Kansas, and the District of Columbia. An additional $1 million will be used to establish a consumer fund to provide refunds to eligible customers who received Block’s so-called “Peace of Mind” guarantee in 2001.

Block’s policy is to cover penalties and interest if it makes an error on a tax return. For a $22 fee, consumers can receive the “Peace of Mind” guarantee under which Block also agrees to pay up to $5,000 in additional tax assessed.

The attorneys general contended that many consumers did not know the service was optional or that they had agreed to accept the service for a fee. An estimated 163,000 people paid for the guarantee in 2001.

Block entered the settlement without admitting any wrongdoing and continues to deny the states’ allegations.

Under the settlement, the Kansas City, Mo.-based company must provide customers with a written copy of the terms and conditions, which must be signed and dated by the consumer.

Pennsylvania Atty. Gen. Mike Fisher said many people were “completely unaware” that they were paying for the service.

“Our settlement will return money to consumers and will require the company to fully disclose that the ‘Peace of Mind’ guarantee service is available for an additional fee,” Fisher said.

But James H. Ingraham, H&R Block’s general counsel, said the company had programs to ensure tax professionals accurately explain the product, discuss its benefits and state the fee.

“We’re confident that we have provided this product responsibly to our clients in the past and will continue to do so in the future,” Ingraham said.