Posts Tagged ‘educational credits’

Oops! H&R Block screws up

Posted on: March 14th, 2013 by

Eric L. Bach, CPA - Professional Tax Preparer - Rockville, MDA tax-preparation software glitch caused more than 600,000 returns to be filed incorrectly, delaying refunds by as much as six weeks, the IRS says.

H&R Block, the nation’s largest tax preparer, confirmed that its software failed to fill out a mandatory field on Form 8863, which is used to claim educational credits.  The IRS would not say what percentage of the roughly 600,000 faulty returns came from H&R Block, but the company received thousands of complaints on its Facebook page and on Twitter.  An Internet search did not yield similar complaints against other tax preparers.

The snafu is affecting about 10% of the 6.6 million tax returns containing Form 8863, IRS spokeswoman Michelle Eldridge says.  Those taxpayers may have to wait six more weeks before they receive their refunds, she says, adding that the IRS is hoping to reduce that wait time.

H&R Block confirms there is an issue with tax returns filed before Feb. 22 because the IRS changed the way it processes some of the yes or no questions on the form.  While in previous years, leaving a field blank to indicate “No” on certain questions was acceptable, the IRS is now requiring preparers to enter an “N.”  As a result, H&R Block says, it is working with the IRS to clear these errors, but the company would not give details on how it is correcting returns or exactly how long taxpayers will have to wait for their refunds. The IRS says it is able to keep processing these returns now that it is aware of the system-wide error, but that affected taxpayers will still face delays because of extra steps needed to correct the issue.

The error is creating delays for taxpayers who, following the fiscal-cliff deal, already had to wait an extra two weeks before filing their returns, many of whom were counting on their refunds to pay their bills.

Leslee Napier, a 26-year old nursing student in Princeton, Ind., prepared her return with H&R Block on Jan. 24 so that it would be one of the first returns accepted on Feb. 14, when the IRS began processing forms for education credits.  But weeks after her return was supposed to be accepted, the “Where’s My Refund” tool on IRS.gov said her return was still being processed. It wasn’t until more than three weeks after her return was supposed to be accepted that an IRS agent told Napier her return was being held because of issues with Form 8863 and that it might be four more weeks before she receives her refund.  “I was worried all this time that I did something wrong or that I was being audited,” says Napier, who is waiting on her refund to pay off a $600 line of credit she opened with H&R Block in December to get her through the holidays.  Meanwhile, interest charges are piling up, she says, and she is waiting to catch up on bills and buy new clothes for her 2-year-old daughter.

For students, the delays come at a time when many are facing state deadlines for applying for financial aid: the Free Application for Federal Student Aid, the form for applying for federal financial aid, requires tax information.  Elizabeth Havens, a student in South Carolina, says she took a copy of her return to her school so that she could move ahead with her financial aid application while she waits for IRS approval.

Students still waiting on their returns to be processed can manually enter their financial data on the FAFSA and then return to update the information once their returns have been accepted, according to the IRS.

Maybe you should look for a BETTER tax professional.