H&R Block glitch delays millions of tax refunds

TAMPA - Michael Picart has been filing tax returns for his family and friends for nearly ten years.  So he's more than familiar with IRS form 8863, the tax credits for education filing.  What he didn't expect was the IRS to send out notices saying "we're holding your refund" on the tax returns he filed.

He made an attempt to find out about the problem by visiting H&R Block's website, because he used the company's software to prepare the tax returns.

"If there was a press release or there was some news item, I would see it there," Picart thought.  "But I didn't see it there.  Neither was there any information from the IRS."

Picart said he found out more about the problem from a Facebook page called "Club 8863," on behalf of those who filed form 8863.

"There were people saying they were going to lose their cars.  Their kids will not be able to go to after school care because they were depending on this money," Picart said.

The Tampa resident said it was frustrating to find out that both the IRS and H&R Block had been working for weeks on a resolution to the glitch that may have fouled up as many as 3 million tax returns.

"Why weren't we informed sooner?" Picart said.  

On a blog page, H&R Block said on some returns it left blank the answers to questions 22-26, while the IRS requires a "yes" or "no" answer.  In the past, H&R Block said blank answers would not have affected the return, but new rules from the IRS were not adjusted into the company's software.

That means everyone who filed for the 8863 education tax credit with H&R Block may not get their tax returns for an additional three weeks because of the processing delays.  That comes on top of a two-week delay imposed by the IRS as it made changes to form 8863.

"They're literally irate," Picart said after reading the Facebook posts.  He said people wanted more time to deal with not getting their tax refund on time.

If you've received a letter that says your refund is on hold, you don't have to do anything except wait for the process to be completed, which could take three weeks.  If you receive a second letter requesting more information, follow the instructions and immediately send the form back to the IRS.

Other tax return companies such as TurboTax said their software was not affected by the IRS changes to form 8863.