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When a Tax Preparer makes a Silly Mistake

He finally got his dough, 10 days ago, after four long months -- all $3,634, plus $177.19 in interest, from the Internal Revenue Service. But Forrest Harris of Bowie still has wounds that haven't healed. He was gored by a careless mistake, and he had great difficulty getting it rectified.

The error was made by the world-famous tax preparation company H&R Block. When the company prepared Forrest's federal income tax return last April 15, it said he owed the government $3,634.

Forrest, a human resources manager for the Commerce Department, gulped hard and asked if there might be some mistake. The Block employee who did his taxes said she didn't think so. If the office computer said he owed $3,634, that was that, as far as she was concerned. So Forrest dutifully wrote a check. But the figure didn't sit right -- especially since Forrest had gotten an $800 refund from Uncle Sam the previous year, and his circumstances had changed hardly at all in the subsequent 12 months.

So, over the summer, he asked a friend who's an accountant to look over his 2001 federal return. It didn't take long for the friend to "make the catch." H&R Block had mistakenly categorized Forrest's retirement contribution for the year. Instead of coding it as a 401(k) investment, Block had coded it as K (for "household employees").

A simple goof, right? Simple to fix, right? Ah, dear wet-behind-the-ears friend, you must never have dealt with the IRS. Or with H&R Block.

Forrest reached Bill Southwood, Block's district manager, after his accountant friend discovered the mistake. Forrest asked for $3,634 of Block's money. Why should Forrest be without that much dough when the mistake on his return wasn't his? Bill told him that the company does not have funds sitting around to correct mistakes, even if the company made them. The company agreed to file an amended return on Forrest's behalf, right away, for no extra charge. But according to the IRS, no amended return arrived until September.

The one bright spot in the story had to do with a much smaller sum. Bill Southwood agreed to refund Forrest's $156.25 tax prep fee. Bill mailed Forrest a check. But Bill forgot to sign it. When Forrest called to point this out, Bill agreed to meet him at the Addison Road Metro station in 10 minutes to take care of it, even though rain was pouring down. Bill also gave Forrest a $100 gift certificate for future Block services. Don't bet that Forrest will ever use it, despite the extra mile that Bill walked (swam?).

Forrest's journey through the IRS bureaucracy was a bit bumpy, too. Kathy Beyers, the caseworker assigned to the matter by the Taxpayer Advocate Service at IRS, insisted at first that Block had done Forrest's return correctly. She said this even though she had in front of her the original return, an amended return, W-2 forms and a statement from Block that described (and admitted to) the error.

It was at about this point that Forrest left a plaintive voice-mail message on the phone of my researcher, Samantha Ganey.

"They win," he said. "They beat me down. I don't want to continue to stress myself out." In the end, however, Forrest didn't quit his crusade and the IRS came through with his dough. Forrest is relieved that his "odyssey" is over. Who couldn't sympathize?

Jim Dupree of the IRS media relations office said the agency probably would catch a coding error even if a taxpayer doesn't file an amended return. However, a refund takes longer to arrange if a taxpayer doesn't complain, Jim said.

Lessons?

The biggest and best was offered by Delores Savage, general manager at Jackson Hewitt Tax Service in Oxon Hill. When an error is made on a return, the IRS won't hold a tax preparation company responsible, Delores said. It will hold the individual taxpayer responsible.

So anyone who uses a professional preparer should check, check, check the figures before mailing in a return.

I always do. But after hearing the Forrest saga, I'm going to do it once more for good luck five months from now.

By Bob Levey
The Washington Post (November 18, 2002)

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