Tuesday, February 1, 2011

Mistakes! Everybody makes them! All returns deserve a "second look"! And a third! And a fourth!

Philadelphia tax lawyer Kelly Erb, who blogs as TaxGirl, posted about the advertising/PR/legal war going on between the two big tax prep chains, H&R Block and Jackson Hewitt.

Much of it centers on H&R Block's Second Look campaign, in which Block says they will take a "second look" at your tax return for $29. If they find mistakes, they will advise you on the next step to take, which is to prepare an amended return. According to Block, they find mistakes in a majority of the returns they review under this program.

This is not very surprising. It is easy to make mistakes in tax prep. Some may not be fault of the previous tax preparer. The taxpayer may have misunderstood an interviewer's question or may have neglected to bring a document with them to the preparer.

That is why it is essential that ALL TAX RETURNS, including those prepared by Block itself, should get a "second look."

In fact, the IRS effectively has a "second-look" mandate for all VITA-site prepared returns. They don't call it a second-look. They call it a quality review.

Our VITA site carries the "second-look" process much farther than the IRS rules require.

1) First look: an IRS-VITA certified tax preparer interviews the taxpayer, examines the taxpayers' documents, annotates the IRS required VITA intake and interview form, prepares a pro forma paper estimate of what the taxpayers' return should look like, and then begins entering the data into a computer in TaxWise. The taxpayer is looking over the preparer's should as the preparer enters the data. At several points, the taxpayer is asked to double-check information as it is being typed in, especially critical information like the taxpayer's address and bank account information (if it's a direct deposit return.) If the preparer has any questions while preparing the return, s/he asks for help from the site coordinator (me!) After completing the computer return, the preparer "reality-checks" it against the pro forma paper estimate. The preparer also runs the TaxWise diagnostics command to check for certain types of technical errors that could prevent efiling.

2) Second look: An IRS-VITA certified Quality Reviewer comes to the table, sits down with the printed out draft return and the source documents and works through a detailed checklist to search for any errors in the return. The client is still sitting at the table and available to answer any questions that arise in the Quality Reviewer's mind. The Quality Reviewer checks with the site coordinator (me!) if s/he has any questions.

3) Third look: The original preparer walks the taxpayer line by line through every item on the federal and state returns to make sure that the taxpayer understands and agrees with the accuracy of the documents we have prepared. Again, they check with the site coordinator (me!) if they have questions.

4) Fourth look: Prior to efile, I sit down in a quiet place with all the source documents and preparer notes. If any questions arise in my mind, I contact the preparer, the quality reviewer, and/or the taxpayer for any additional information I feel is needed to make sure the return is accurate prior to submitting the efile.

After all this, are there still errors on the returns we prepare?

Indeed there are. It is unavoidable. Taxpayers and preparers are fallible. A common source of error is that after efiling, the taxpayer receives another W-2 in the mail for a small side job held early in the tax year that he'd forgotten all about. Perhaps it arrived late because it had been sent to an old address and required mail forwarding.

That is what amended returns are for. But we try to minimize the need for those as much as possible. It is best to interview the client carefully and try to help jog their memories as much as possible so we can get the return right the first time. The returns we prepare are only as good as the information we get from our clients. (In case you are wondering, if we feel the taxpayer is deliberately not providing accurate information, we will politely decline to prepare their return and refer them to a professional preparer. We also do this when the taxpayer's situation is sufficiently complicated that it falls outside the scope of our certification.)

But if the taxpayer is willing to work with us to provide accurate information and if the return falls within the scope of our certification and training, our VITA site will happily provide as many "looks" as we feel we need to make sure the return is right.

And we do it for free.

1 comment:

  1. I hear more negativity about H&R Block from clients that come in to our site, it's strange to charge money for a second look...why put a price on accuracy? If you prepared a return and are paid to do it, the least you can do is be accurate. One lady said she went to HR Block and they didnt even ask her about the possibility of child care/dependent care expenses, so she didn't know that she could put it down/what info she needed- this year she did bring in the info here to our site and got some more money back for it!