Electronic glitch delays tax refunds

GRAND RAPIDS, Mich. (WOOD) - Some people who electronically filed their taxes early are still waiting for their tax refund because of a technical problem.

Anyone who filed their taxes electronically between Feb. 14 and Feb. 22, the form causing all the problems is 8863 -- For American Opportunity and Lifetime Learning Credits.

The problem is that the form changed this year and certain software was not updated in time. College students or parents who are paying for college can file the 8863 form to get credits up to $25,000 for expenses like tuition, books and supplies.

On the old form, tax preparers used to be able to leave certain lines blank when a "no" answer was given. But this year, they needed to put an (N) in the required field. If not, the refund would be delayed.

This may seem like a small issue, but according to the Internal Revenue Service, some 600,000 tax filers were affected.

H&R Block says the problem on its software has now been fixed.  In a statement, H&R Block was quick to point out that not only its software had problems.

"It's important to note that the tax returns were prepared accurately. The error occurred in e-file processing," the statement reads in part. "H&R Block appreciates that the recent issue involving the filing of Form 8863 may be causing clients problems. We continue to work with the IRS on their behalf."

At first the IRS said it would take up to eight additional weeks to get those refunds sent out, but is now saying it won't take that long.

"The IRS is continuing to review the situation and working with affected software companies to assist in the processing of these tax returns. ... We are taking special steps to help taxpayers. This means the IRS may need as much as 4-6 weeks from this date to issue a refund to the taxpayer," a statement reads in part.

Anyone who was affected can go to IRS.gov and click on the "Where's My Refund" tab.

------

Full IRS Statement on Form 8863:

March 12, 2013

The IRS is aware of a problem with a limited number of software company products that affected some taxpayers filing Form 8863, Education Credits, between Feb. 14 and Feb. 22. The problem resulted in those tax returns requiring additional review by the IRS.

The IRS is continuing to review the situation and working with affected software companies to assist in the processing of these tax returns. Typically, the review process for a situation like this takes up to 8 weeks. We are taking special steps to help taxpayers. This means the IRS may need as much as 4-6 weeks from this date to issue a refund to the taxpayer. While the number of tax returns affected is around 10 percent of the total returns claiming the credit, the IRS continues working aggressively to address this situation and hopes to reduce those projected refund time frames further.

Taxpayers who filed a Form 8863 with their tax return during this time period can check “Where’s My Refund?” on IRS.gov to determine the status of their refund. If taxpayers have not received a refund date and filed during the affected period, they should contact their software provider to determine if they may be in the affected group.

The IRS reminds taxpayers that "Where's My Refund?" is usually updated overnight, so taxpayers don't need to check “Where's My Refund?” more than once a day.

---

Full statement from H&R Block:

What I want you to know right now are a few key points

• Any problems that occurred with Form 8863 have been fixed
• H&R Block clients have no immediate action and are being contacted directly
• The scope of the issue being reported is not accurate. The number of impacted taxpayers is NOT just those who are H&R Block clients.
• The IRS has informed us and other impacted providers that they are currently processing returns and should be able to more accurately provide refund timelines via its “Where’s My Refund?” web site.  Some H&R Block clients are already reporting a change in their refund status since the IRS began processing these returns.

• It’s important to note that the tax returns were prepared accurately. The error occurred in e-file processing.
• H&R Block appreciates that the recent issue involving the filing of Form 8863 may be causing clients problems. We continue to work with the IRS on their behalf.
• Right now we are resolutely focused on ensuring the returns are processed on behalf of our clients.
• We will continue to update clients as more information becomes available.  We thank clients for their patience while we work with the IRS to expedite the filing.

H&R Block Statement

H&R Block has confirmed with the IRS that there was an issue with a limited number of software company products that affected some tax returns filed between Feb. 14 and 22, 2013. These affected returns included certain education tax credits claimed on Form 8863.

H&R Block has worked with the IRS to expedite a solution to this issue for our affected clients.

We are communicating directly with our impacted clients to assure them that we are doing everything we can to expedite their returns. The IRS has informed us and other impacted providers that they are currently processing these returns. This review process means the IRS may need 4-6 weeks from this date to issue a refund. H&R Block clients are already reporting a change in their refund status since the IRS began processing these returns.

The IRS is reminding taxpayers to check “Where’s My Refund?” on IRS.gov to determine the status of their refund. Please note this website is updated overnight by the IRS, so you don’t need to check it more than once a day.

At this time, there is no additional action needed if you are an H&R Block client who:

1. Received an IRS letter requesting additional information for Form 8863 and already responded to the IRS; or
2. Have not received an IRS letter about Form 8863 to date.

For those H&R Block clients who have received a letter from the IRS and have yet to respond, please call your local H&R Block office or 800-HRBLOCK. The office or customer service agent will be able to serve you and provide next steps.

The IRS has stopped sending letters based on this Form 8863 issue to this group of affected H&R Block clients.

If affected clients applied for financial aid through the FAFSA program, there are manual steps they can take that will allow their FAFSA application to proceed while their return is still processing.

The Department of Education suggests:

• If your return has not yet been processed by the IRS, you can manually enter the tax return data on the application.
• Return to the online FAFSA to update the information when your return has been processed.

This information is posted on the FAFSA section of the Department of Education website http://www.fafsa.ed.gov/.

H&R Block appreciates that this issue may cause problems for our clients and we are doing everything in our power to address the processing of these returns. We will continue to update clients as more information becomes available. We thank our clients for their patience while we continue to work with the IRS to expedite the filing process on their behalf.