The IRS already had delays with tax refunds for millions of consumers. Now, an H&R block tax preparation error leads to delayed refunds for about 660,000 taxpayers. The affected taxpayers were those whose returns included Form 8863 for claiming educational credits. Returns are delayed for those taxpayers for up to six weeks.
The error was caused, in part, because of a change to IRS requirements for “no” response boxes. In the past, a blank box constituted a “no” answer. However, the IRS began to require a check mark in the “Yes” or “No” box, rather than allowing blank answers. The IRS warned that blank boxes would lead to a delay in processing. Those boxes were left blank on H&R Block’s affected customers. While H&R Block’s mistake has been most widely publicized, it’s possible that non-H&R Block customers have run into the same issue.
The delayed tax refunds present challenges for consumers, especially those who depended on their tax refunds to meet certain financial obligations. Students who need tax information for their Federal Application for Student Aid also have concerns about the delayed processing of their tax returns. According to the FAFSA website, college financial aid departments are aware of the delay. Fortunately, if you’ve already filed your tax return, you can still manually input the information into your FAFSA form and updated it once the IRS has successfully processed your tax return.
Affected customers are also outraged because of the amount of time it took for H&R Block to notice and acknowledge the issue. Many taxpayers were first alerted to the error when the IRS sent a letter notifying of problems with their tax return. They first notified customers via their Facebook page on February 28. An apologetic statement from the company’s CEO was posted two weeks later on March 15.
Hundreds of customers have posted to the company’s Facebook page expressing their outrage and requesting refunds of preparation fees. H&R Block’s website details its guarantee saying “If H&R Block makes an error on your return, we’ll pay resulting penalties and interest” as well as “We’re so certain that you’ll have a positive experience that you don’t pay until you’re satisfied.” However, the company as not, thus far, offered refund of fees to the affected customers.
Two H&R Block customers in Michigan have filed a lawsuit against the company for fees and compensation for the delay in refund, according to the Kansas City Star. The lawsuit has applied for class action status. If granted, other affected customers can join the lawsuit to possibly receive a refund of fees and compensation.
The IRS is undoubtedly facing trouble processing returns due to a late start to tax season and a shorter tax season overall – 75 days this year compared to 102 days in 2012. Tax season started later than normal this year and there was an additional two-week delay before the IRS began accepting returns that included Form 8863.
There’s some hope: some of H&R Block’s affected customers have posted that they’ve already received their tax refunds. Others comment that they’re due to receive their refunds in the next two weeks.
You can use the IRS “Where’s My Refund?” tool to check the status of your refund, but it’s important that you only check it once a day since the information is only updated once daily (overnight). Checking more often than that can cause issues and delays with the tool. H&R Block can’t give you the status of your refund. So if you were an affected customer, checking with the IRS will be more effective.
Sources: IRS.gov, FAFSA.gov, Forbes.com, MarketWatch.com
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