NewsInferno; March 21, 2013
Lawsuits are being filed against tax giant, H&R Block Inc., over payment delays involving hundreds of thousands of incorrectly filed tax returns. Delays can be as long as six weeks.
In one case, a lawsuit alleges that H&R Block advertises a 100 percent accuracy guarantee on every product, but that H&R Block has erred, yet has not offered compensation to any of the plaintiffs or members of the represented class, said the Kansas City Business Journal.
That lawsuit, said the Kansas City Business Journal, includes statements issued by Bill Cobb, H&R Block CEO, in which he admitted the errors. “This was our mistake—and I sincerely apologize…. I want you to know that we hear the frustration of those impacted by this issue loud and clear, and we’re working every avenue we can to get your refund to you as fast as possible…. Finally, I know an apology won’t put your tax refund in your hands right away, and many of you still have questions. But right now, our singular focus is to get you that refund, and we have all hands on deck to help make this right.”
MarketWatch reported on two separate class-action lawsuits. Both involve a software glitch that led to the delay of hundreds of thousands of refunds. According to a prior MarketWatch report, the Internal Revenue Service (IRS) said that a mandated field was left blank on returns that used IRS Form 8863. This form is used to claim educational credits. Some 660,000 refunds were impacted.
The California class action alleges that H&R Block failed to comply with IRS regulations and procedures in the way in which it prepared the filings and that the delays created by the mistake have “caused significant disruptions and damage in households across the country,” said MarketWatch. H&R Block is being sued for breach of contract and negligence and for violating state consumer protection laws. The Michigan lawsuit seeks tax-preparation fee refunds and compensation for financial problems brought about over refund delays.
Cobb has not said if his company would refund customers over tax preparation costs. Meanwhile, H&R Block spokesman, Gene King said, “We continue to communicate with impacted clients and provide them updates when we can,” according to MarketWatch.
In addition to long refund delays, which are hitting some filers hard, the delays are also creating issues in the way in which federal financial aid filings are processed, explained MarketWatch. In some cases, tax returns must not only be completed and filed, they must be verified by the IRS before students can finalize their financial aid packages. This delay has created hardships for some families struggling with children in college.
The Department of Education did step in, said MarketWatch, notifying colleges about the issue and asking the schools to award aid estimates based on financial aid from information. It is not clear which, if any, schools will move ahead with awarding aid based on unverified form information.