I just received a notice from the IRS regarding my 2010 Taxes, explaining an apparent discrepancy with my reported income along with an instruction pamphlet describing the "by mail examination" process used by the IRS, along their notice I owed almost a Thousand Dollars.
Having paid for and used the Home version of H&R Blocks Tax Preparation Software Program to prepare and electronically file my taxes, assuming I could trust H&R Block as an expert authority along with their touted guarantees and claims to offer support if the IRS ever questioned my return, I immediately reviewed my 2010 tax return as prepared and submitted on my behalf by H&R Block and was shocked at what I discovered.
Among the forms I had prepared using the H&R Block Tax Software, was Schedule C for my small business income, but with a subtle maneuver within the depths of their software which was not apparent to me, H&R Block substituted Schedule C-EZ in place of Schedule C inappropriately causing my tax return to indicate I had lower earnings than what my 1099-Misc income statement indicated, so clearly the IRS had every reason to be confused about the discrepancies with my income.
When I had initially prepared my taxes for 2010 and after I had completed the H&R Block error review using their tax software program before electronically filing my return, I of course also printed a paper copy for my records and I kept the entire H&R Block software program from 2010 on my computer along with a saved file for my 2010 taxes.
Sadly, any normal individual who simply sat at their kitchen table and prepared their taxes by hand would never have made the same glaring mistake H&R Block did by filing Schedule C-EZ inappropriately. I am a real estate agent but it wouldn't be any different if I ran a hardware store or any other small business, but in my case, I had provided customer rebates of the commissions I had earned (as is commonly done within the industry) and for tax purposes, no different than a hardware store owner providing a refund for a hammer or whatever other examples are appropriately to be entered on line 2, Part 1 the 2010 Schedule C form which is titled "Returns and allowances" but there is absolutely no place on Schedule C-EZ to make such an entry, yet the H&R Block Tax Software just ignored my Scedule C entry for returns and chose to file Schedule C-EZ instead, completely omitting the amount of income I had entered for returns. To make matters worse, instead of using the gross income entry I had entered on Scedule C, Part 1, Line 1 (which also matches my 1099-Misc reported income) the H&R Block Tax Software completed Schedule C-EZ and indicated my gross income as a lower amount than as shown on my 1099-Misc income statement with no explanation for the discrepancy made available to the IRS when submitting my tax return (even though the Gross income H&R Block reported for me was a result of subtracting my "Returns" entry from my actual gross income entry.)
Clearly, anytime there is an entry on Schedule C for a Refund of Gross Income, only an idiot would choose to file Schedule C-EZ because there is absolutely no provision or place to enter on Schedule C-EZ any Refunds or adjustments and of course the IRS is going to question any gross income reduction without an appropriate explanation such as the IRS unmistakeably provides on Schedule C for that purpose.
I called H&R Block for assistance and to explain they had a big problem with their tax software which may be causing problems for thousands of small business owners and wasting countless resources and man-hours within the IRS chasing down errors caused by the H&R Block Software which in the end upon verification, results in no change to the tax actually owed, but just wastes everybody's time, ironically as most tax payers expect H&R Block will save them time.
To add insult to injury, I was told by the H&R Block representative who I asked for assistance with the letter and instructions I received by the IRS, that technically my letter was not an "audit" by the IRS so therefore I was not eligible for their assistance! Duhhhhhh, my instructions from the IRS are titled "Examination by Mail" so my question now is, just how much more unscrupulous can a company be than H&R Block, not to mention H&R Block was specifically and negligently responsible for the error in the first place, which caused the IRS to contact me and ask for either an additional $1000 or evidence the additional taxes and penalties are not actually due.
Personally speaking, I can handle this matter as needed with the IRS since H&R Block is not willing to help, but I can't think of another business who is more deserving of being disclosed as a Ripoff than H&R Block is!
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