H&R Block (HRB)–the largest public retail tax preparation company in the United States–has confirmed that they have filed many tax returns containing certain delayed credits too early, causing their clients refunds to be delayed. The primary issue is the Education Tax Credit which was not accepted for electronic filing until recently (February 22nd). This has prompted the IRS to send letters to HRB clients instead of their expected refunds. HRB has released the following statement:
“H&R Block has confirmed with the IRS that there was an issue with certain tax returns filed before February 22, 2013 that included certain education tax credits claimed on Form 8863. We have worked with the IRS to expedite a solution to this issue for all of our affected clients.”
If you are a current HRB client, and have received notification from the IRS concerning the early filing of your tax return–or you think you may be affected–it is advised that you contact your local HRB office, or contact their executive headquarters by calling 1-800-HRBLOCK.
Please read the following brief from the IRS. Form 8863 (education credits) will not be accepted by the IRS until Mid-February. An exact date has not yet been offered. Any return that is Electronically filed with Form 8863 before the acceptance date will be rejected. Any return that is mailed to the IRS will not be processed until education credits have been approved. If you would like more information, please contact an R&G Brenner professional toll free (888) APRIL-15, or by clicking here.
The IRS plans to begin processing 2012 tax returns January 30, 2013, it has announced. With the massive fiscal cliff tax bill enacted January 2 that is mostly retroactive, the IRS has its work cut out for it. There are forms and instructions to revise, not to mention computers to retool. While the IRS says that it worked to anticipate Congress’ last minute tax law changes, the final law required the IRS to do considerable updating and processing before accepting tax returns.
The good news is that the vast majority of tax filers — more than 120 million households according to the IRS – should be able to start filing their tax returns January 30. In fact, the IRS notes that it will be able to accept tax returns impacted by the retroactive AMT patch as well as the three big extender provisions:
People claiming the state and local sales tax deduction;
Higher education tuition and fees deduction; and
Educator expenses deduction.
Waiting to File? Despite the massive IRS effort to get filing going right away, some taxpayers will need to wait until late February or March. Examples include people claiming residential energy credits, depreciation of property or general business credits. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March. The IRS says it will announce a specific date in the near future. Key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available onIRS.gov.
Even though Electronic filing has been pushed back to January 30th, R&G Brenner encourages all taxpayers to file as soon as they can. Both NY State and the IRS have delayed refunds due to budget constraints in the past. Those that file earlier will be queued up and ready to be transmitted to the IRS/State(s) as soon as the “gates” are opened, and this will reduce the chances that your refund is affected by any potential budget issues. Contact an R&G Brenner professional today. We are open and ready to assist you.
Congress might have averted the “fiscal cliff,” but its last-minute action has created some big headaches and questions for tax filers.
“There’s a couple of impacts that I’ve never seen – this is my 44th tax season,” said John Hewitt, founder of Virginia Beach-based Liberty Tax Service and Jackson Hewitt, two of the nation’s largest tax-preparation companies.
Those who want to file a 1040 form electronically – the option favored by more than 90 percent of taxpayers – can’t do that yet because the Internal Revenue Service hasn’t signed off on finalized forms.
“Right now, a 1040 can’t be released,” Hewitt said. “It has a watermark on it saying, ‘Do not file.’ “
Filing paper forms probably won’t be possible until the end of the month, he said.
Taxpayers who like to knock out their federal and state returns together – whether filing themselves or using a tax preparer – face further delays because many of the states that collect income taxes don’t have their forms ready either.
“Typically, as of Jan. 3, we would be ready to go and fully tested in all the states that have income taxes,” Hewitt said in an interview Thursday. “Well, this year, only about a dozen of the states are ready to go because they’ve all been waiting on the federal government to act before they can finalize their forms and tax rates and so forth.”
Virginia will be ready by Monday, Hewitt said.
An IRS spokesman said Thursday that he could not say when new forms would be approved or whether there would be any adjustment of key dates for tax filings.
“Those decisions are under way and should be coming out relatively quickly, so stay tuned,” he said.
New legislation such as the fiscal package just approved by Congress needs to be reviewed, and IRS computer systems need to be configured to adhere to the bill’s provisions, the IRS spokesman said.
“These things don’t happen in a matter of hours; it takes days.”
Months ago, the Internal Revenue Service set Jan. 22 as the start date for the filing of electronically transmitted, computer-generated tax returns – the latest start date since electronic filing began in the late 1980s, Hewitt said.
“Those people that want their money quickly, that want their money in just a couple of weeks, are going to get it a week later than at any time since electronic filing was invented 25 years ago,” he said.
Carolyn Buzek is a Jackson Hewitt franchisee with eight offices in the Hampton Roads area.
“The IRS gets a bum rap in a lot of cases,” she said, adding that “everybody blames them for why you can’t file.”
“Well, it’s really Congress that makes the decisions, and the IRS has to scramble and try to figure out when you have the wording,” Buzek said. “Some of this is getting pretty complicated.”
California-based Intuit, maker of TurboTax, offers both online and desktop products enabling taxpayers to file their own returns. Electronically completed forms are transmitted to the company, which sends them to the IRS when it’s ready to receive them, Ashley McMahon, a spokeswoman, said Thursday.
Both products include prompts instructing users to download updates.
Hewitt said one of the biggest burdens his company will face this year is having to deliver the bad news to some customers that they will be getting their refunds late.
“These are people who live paycheck to paycheck,” he said, adding that they typically get returns averaging about $3,000.
Another burden is internal, affecting the biggest component of Liberty’s workforce – about 100 computer programmers.
Typically, they get information in October from the states with income tax.
“They have from October to January to get ready,” Hewitt said of his company’s programming staff. “Well, now we have only a few weeks to get ready.”
Hewitt said U.S. taxpayers are facing a situation “unheard of in the annals of tax preparation.”
“I don’t think Congress really understood the impact of what’s going to happen with tax filing this season,” he said. “Maybe they didn’t care.”
If a return is filed with the wrong address or a taxpayer moves after filing for their refund, the check is returned to the IRS and held there until someone claims it. This year 9,662 New Yorkers checks have been sent back to the IRS as undeliverable. Of these checks there are over 1,000 owed to Long Islanders.
Thanks to the efforts of Mr. Charles Freret, the following fax was sent by the Vice President of TurboTax. If you are a taxpayer that has used Turbotax and filed with a 1099R for tax years 2007, 2008 or 2009, you should contact Mr. Meighan via fax at 858-408-2714
The IRS has reported that more than 1.4 million tax payers are due over $1.3 BILLION in unclaimed refunds because they have not filed a 2006 tax return. These refunds are still available, but only if a 2006 tax return is filed before April 15th, 2010. After that, the government gets to keep your refunds.
Some people may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury…
By failing to file a return, people stand to lose more than refunds of taxes withheld or paid during 2006. For example, most telephone customers, including most cell-phone users, qualify for the one-time telephone excise tax refund. Available only on the 2006 return, this special payment applies to long-distance excise taxes paid on phone service billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60, or taxpayers can base their refund request on the actual amount of tax paid. For details, see the Telephone Excise Tax Refund page on IRS.gov.
In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds, which in 2006 were $38,348 for those with two or more children, $34,001 for people with one child and $14,120 for those with no children. For more information, visit the EITC Home Page.
So if you thought you did not make enough income to file a tax return for tax year 2006, you may have money due to you. The median refund for 2006 is $604, and in this economy every penny counts. If you haven’t filed a 2006 tax return, contact an R&G Professional today and we will help you determine if any of these unclaimed refunds belong to you.
It appears that for the third year in a row, NY state is planning on delaying refunds to New York taxpayers. The last two years, the state was savvy in delaying refunds by issuing a blanket letter requesting “additional documentation” in order to release refunds. However, in many cases, the state already had all the documentation in order to process refunds. In light of the current budget crisis, it appears New York State can no longer beat around the bush.
Two other states–Hawaii & North Carolina–have already informed their taxpayers that refunds could be held as long as July! New York state may soon follow suit if they can not resolve the projected $8.2 Billion budget gap by April 1st. And with the State Senate at a stand still, and continuous infighting between NY legislators and Governor Patterson, it appears almost certain that New York will also be forced to delay over $500,000,000 in state refunds.
NY State has until June to issue all refunds before they must pay out interest. However, this is little comfort for struggling & out-of-work NY taxpayers that need these refunds just to make ends meet.
“The refund checks amount to money that belongs to taxpayers. They haven’t given the state permission to manage it for them,” said an editorial in North Carolina’s News and Record newspaper. “[The state] should have anticipated and planned for shortfalls. Time is money, and the money should be returned to its rightful owners on time.”
Both New York and North Carolina point out that delays will not apply to those returns that have already been filed. New York has paid out $293 million in refunds so far to 281,000 taxpayers; North Carolina has issued more than $400 million.
However, since the majority of taxpayers have not yet filed, these refund delays will affect the majority of NY Taxpayers. This is not right. NY Taxpayers pay on time, their refunds should be distributed on time. We here at R&G Brenner recommend that if you are able to file your tax return and have not yet done so, to file as soon as possible to avoid having your refunds delayed.