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The IRS reports an estimated 600,000 tax returns filed by the nation’s biggest tax preparation service, H&R Block, will take longer than usual to process because of an error by the tax preparation company. It has to do with forms filed for education tax credits.
The IRS has updated the way it accepts information on electronic forms for “yes” and “no” answers. In the past, automated tax filers have marked “yes” when needed, but have left both the “yes” and “no” fields blank, when the answer was “no”.
Now, the IRS requires preparers to enter an “N” for “no” and many automated systems were not picking up that change.
In this case, MarketWatch reports about 10% of the 6.6 million tax returns that have already been filed by H&R Block are affected. The company has not yet shared how it is correcting the returns.
The IRS predicts the error could delay refunds to the affected taxpayers by several weeks.
In fairness to H&R Block and other tax preparers struggling with this issue, this year’s “Fiscal Cliff” negotiations have produced unprecedented income tax filing delays. Some forms necessary to complete 2012 income tax returns have been available no more than a few days.
In the past, proposed forms were made available to tax preparers, tax software vendors and other stakeholders weeks in advance of when they would be used to file returns.
McRuer CPAs provides its individual and business clients with tailored, one-on-one tax preparation and planning services and does not follow the same practices as many more high-volume, automated tax preparation systems. Our clients are not affected by this issue.
