H&R Block Gaffe Affects 600,000 Tax Returns
by Terri Eyden on
By Ken Berry
So you think you've got headaches this tax return season? They're probably nothing compared to the migraines the folks at H&R Block are experiencing after the nation's largest tax preparation firm admitted to botching more than 600,000 returns. The bungle – which is an error of omission rather than commission – could delay tax refunds from Uncle Sam by as much as six weeks.
The snafu affects taxpayers who used H&R Block to claim a higher education tax credit on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), if the return was filed prior to February 22, 2013.
Taxpayers may be eligible to claim either of one of the two higher education tax credits for qualified expenses in lieu of claiming a tuition deduction. The maximum American Opportunity Credit, which was recently extended through 2017, is $2,500, while the maximum Lifetime Learning Credit is $2,000. Both credits are subject to phase-outs at certain income levels. The IRS says the foul-up affects approximately 10 percent of the returns claiming the credit.
H&R Block is blaming the mistake on a change by the IRS in the way it processes the "yes" or "no" questions on Form 8863. In previous years, the tax prep firm says that leaving a field blank to indicate "no" on some questions was acceptable, but now the IRS is requiring preparers to enter an "N." The software used by H&R Block left a mandatory field blank.
On March 13, H&R Block fessed up to the problem on its Facebook page. "There was an issue with a limited number of software company products that affected some tax returns filed between February 14 and 22, 2013," it posted. "These affected returns included certain education tax credits claimed on Form 8863." Later that same day, the IRS issued a statement that the error could impact approximately 600,000 returns.
Because these returns have already been filed, the IRS will have to work through the arduous process of identifying them and correcting them. It could take as long as four to six weeks to sort through the mess, although the IRS is hoping to move things along faster. This could be distressing news to taxpayers who were counting on refunds to pay living expenses and other bills. To make matters even worse, tax filing season was already delayed while the IRS scrambled to revise 2012 forms and schedules following the "fiscal cliff" deal in January.
In the meantime, the IRS says that taxpayers who filed Form 8863 can continue to check the "Where's My Refund?" feature on the IRS website to determine the status of their refund. If taxpayers haven't received a refund date and filed during the affected period, they should contact their software provider to determine if they may be in the affected group.
Finally, the IRS is reminding reminds taxpayers that Where's My Refund? is updated overnight, so there's no need to check it more than once a day.
You may like these other stories...
Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...
Upcoming CPE Webinars
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.