While hiring a tax preparer may cost you a bit more than filing yourself with tax software, mistakes may cost you more in the long run, and with the implementation of the new tax laws, it’s easier than ever to make an error when filing your taxes. Miscalculation and filing errors are not as uncommon as many may think, and it’s worthwhile to make sure your taxes are prepared properly.
A good tax preparer can limit your risk of an audit, and it’s essential that you employ a tax preparer that offers sufficient financial protection. Happy Tax offers some of the best audit protection in the industry, and we stand by the work that our in-house experts do for our valued clients. However, not all tax preparers offer the same degree of protection.
Taxpayers Rely on Audit Protection
Certain tax preparation companies offer packages to guarantee their support and give the taxpayer some peace of mind in the event of an audit. They may also offer a money-back guarantee in the event of a mistake on their part. However, some of those guarantees are flimsy and hard to enforce against companies that drag their feet. In fact, some tax companies have proven unreliable in upholding their accuracy guarantees.
A couple from Florida, Steven and Adriana Rahal, recently filed their taxes with the popular tax preparation agency H&R Block. The couple was hoping that by using an established tax preparation agency, rather than filing their taxes themselves, they would be able to avoid a stressful tax season. The Rahals thought they were completely covered when they signed up for their tax preparer’s money-back guarantee. In fact, they even bought H&R Block’s “Peace of Mind” plan in an effort to protect their financial assets in the event of an audit.
H&R Block’s Guarantees Prove Unreliable
Most taxpayers will sign up for a tax service’ money-back guarantee or audit protection plan in the hope that they will never actually need to invoke it. However, in the event of an audit or an error made by the tax preparer, these guarantees may not play out as the customer intended. Unfortunately for our Floridian couple Steven and Adriana, that time did come for them. The IRS initiated an audit, and the couple tried to invoke both H&R Block’s money-back guarantee and Peace of Mind plan. They did so in response to the fees related to the audit, which rose to a whopping $17,000.
In the course of their audit, the IRS found a filing error on the Rahals’ returns. Specifically, the IRS found a calculation error made by H&R Block in a couples tax return from the mid-2000s. When the couple attempted to invoke their guarantee with H&R Block, they were all but shut down by the company’s corporate red tape.
The money-back guarantee the couple had signed up for stated that in the event that H&R Block’s agency, or an employed tax preparer, made any errors that would result in an audit or any other form of consequence, the agency will refund their filing fees. Additionally, Steven and Adriana had signed up for the Peace of Mind protection plan, which stated that the company would cover any penalties and/or interest incurred by a customer in the event of an audit. The cost of this additional protection was an extra $40 on top of the company’s regular return filing fees. To taxpayers, to gain that much-needed peace of mind in the event of an audit an added forty dollars seems well worthwhile. Additionally, it promises to pay off some of the extra taxes you might owe do to an error. However, as the Rahals came to realize, H&R Block wasn’t exactly racing to cover their clients when an audit did occur.
Unreliable Audit Guarantees Leave Taxpayers in the Cold
Steven and Adriana got the run around from H&R Block for several months, they had nothing to show for their costly audit. Even after they had provided every required document that the company had insisted was needed to be on file before moving forward, H&R Block refused to pay. At this time, it was estimated that H&R Block was responsible for nearly $10,000 of the 17,000 dollars the couple ended up having to shell out as a result of the audit, but it struggled to follow through on the guarantees.
Disgruntled and out of options, the couple took their story to ABC News. They released detailed information about their encounter and treatment by H&R Block. The couple told the news station about how the IRS determined that their tax returns were miscalculated for the 2012 and 2013 tax years and that they owed more than $17,000 in back taxes, penalties, and interest. They thought that with the Peace of Mind plan, they would get some of this back. But unfortunately for the Rahals, when they applied for the refund they were largely ignored.
ABC News got in touch with H&R Block’s team and asked about the delay. This turned out to be the kick the tax prep company needed to finally refund the couple’s money in the amount of 9,805.35. Peace of Mind encompassed $8,479 of the total refund toward the extra taxes owed to the IRS. The remainder of the refund was for the penalties, interest, and tax prep fees covered by the company’s guarantee.
Although this story has a happy ending, taxpayers should ask themselves how much they are willing to put up with, when it comes to the person filing your taxes. This means seriously considering what sort of guarantees they offer in the event of an error on their part and an audit. Even if guarantees may sound appealing, it’s critical to read over the terms and conditions very carefully.
Tax season is just around the corner, and many taxpayers are starting to think about what tax preparer they will use to file their taxes for 2018. Happy Tax’s customer-centered business approach includes robust audit support and accuracy guarantees, making us the perfect choice for getting the peace of mind you need this tax season.