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H&R Block is the biggest tax-preparation service in the United States – and this year, that may not be such a good thing.
From Feb. 14 to 22, the Kansas City-based firm made errors in possibly hundreds of thousands of federal tax returns by not properly following a change made this year in how to fill out Form 8863. That form is used to reduce taxes by giving taxpayers a credit for certain educational costs.
Now H&R Block customers throughout the country whose returns included that mistake are hearing that their refunds will be delayed by several weeks. Many of those affected are students or parents who need the money or their tax receipts to apply for financial aid.
Compounding the problem and angering many Block clients, many received the bad news from the Internal Revenue Service, which sent out letters telling them their returns needed to be corrected.
The mistake is affecting about 10 percent of the 6.6 million tax returns containing Form 8863, IRS spokeswoman Michelle Eldridge said Tuesday. She didn’t estimate how many of the misfiled returns came from Block, but the company was bearing the brunt of complaints.
Block first told customers of the problem on Thursday, and then only in a brief post on its Facebook site that apologized for the frustration the problem was causing.
Since then, more than 5,500 comments, many of them highly critical, have been posted on its Facebook page.
A followup post from Block on Friday assured customers that if they had already responded to a letter from the IRS or had not received such a letter, they didn’t need to do anything further. Those who hadn’t answered the letter were encouraged to call Block’s customer service line.
Some public relations experts also were critical of H&R Block’s reliance on Facebook to get the word out.
When asked why Block didn’t directly get in touch with customers affected by the mistake, Gene King, Block’s director of corporate communications, declined to comment.
The postings weren’t any help to Benjamin Moore of Kansas City. He said Tuesday, “I’m not on Facebook, and I never saw it. The first I heard about it was when we learned about it from the IRS.
“We then went to the H&R Block office and were told we didn’t have to do anything. They explained the delays about the educational tax credit, and now we’re looking at another six weeks for a refund.”
The IRS notice said refunds could be delayed six to eight weeks, but one Block posting said “we are assured it will not take that long.”
The error occurred because the IRS changed Form 8863 this year to comply with stricter reporting requirements from Congress, and the changes were noted on instructions to the form.
King said a tax preparer previously could leave boxes blank for some questions on the form, and if neither “yes” or “no” was checked, the IRS considered that to be the same as answering “no.”
“But the IRS evidently needed a response,” King said. “Its computers read the two blank boxes as an error and held up processing tax returns.”
The first IRS alert to tax preparers that Form 8863 was not being filled out correctly came on Feb. 20. Block said it detected the problem Feb. 22, but the company didn’t alert customers until Thursday.
