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H&R Block looks to complicate tax returns

by: Robert Lyon   2015-08-27

Here at IRSMedic, we often say how ridiculously complicated the tax code is --- and it's only getting more difficult. A taxpayer, regardless of who prepared their return, is responsible for everything on that return.We've written before on how H&R Block attempts to prepare tax returns with foreign income even though they lack the experience needed to do so (and actually has caused many to have to enter into an Offshore Voluntary Disclosure Program).

 

When we review an H&R Block return, our default expectation is that there will be errors; the more complicated the return, the more errors we expect. Now in all fairness, we have reviewed many returns completed by Big 4 firms, and we do encounter errors as well --- but that tends to be the exception, not the rule. 

 

Some in the tax industry just might not have a taxpayer's interests at heart.

 

H&R Block blocks assistance

 

More recently, H&R Block lobbied to introduce language into the 2016 Fiscal Year "Financial Services & General Government Appropriations" Bill to drastically increase the length of the originally simple Earned Income Credit (EIC) form. This bill, in addition to changing the EIC claimant procedures:

 

  • Cuts the IRS's auditing budget
  • Cuts the IRS's operations budget (remember that hack a few months ago? Well now they have even less funding to stop future ones.
  • Reduces low-income taxpayer services

 

Consequences of the proposed bill

 

As the Earned Income Credit benefits lower-income individuals and families, the proposed changes show a targeted bias against these taxpayers --- taxpayers who will now have little choice but to pursue companies like H&R Block for assistance. H&R Block and similar large-scale tax preparation companies rely on the tax code being complicated for their entire business model, and the proposed changes only serve to widen their target demographic.

 

It's even more interesting because just a year ago, the IRS published a paper on how self-filing taxpayers were more accurate at claiming the EIC than paid filing companies such as H&R Block! And the most accurate EIC filers? Volunteers and those helping the elderly.

 

Now, while there is no direct way of telling that H&R Block itself instigated these proposals (outside of seeing their "contributions" donated to the politicians voting for the changes), their denial speaks volumes about what they don't deny:

 

"Recent media coverage around H&R Block and the Earned Income Tax Credit (EITC) is misleading and diverts attention from the real issues. This is not about competitive business interests."

 

So H&R Block admits it wants the change. It just claims its motives are 100% altruistic. So --- should we believe them?


The future of tax preparation

 

Many countries like the UK & the Netherlands finish their annual tax returns in minutes because the government fills out the majority of their forms. The thing is that the tax code could be simplified and various efforts have been made to simplify it, but companies like H&R Block and Intuit (TurboTax for consumers & ProSeries for tax professionals) specifically lobbied against simplifying returns for individuals.

 

I find it rather disappointing that a firm that can't quite produce quality tax returns on a consistent basis, is demanding legislation that will increase its quality-control problems, all at the expense of taxpayers. Like we've said before: simplify the tax code and save the citizens of this country hundreds of thousands of man-hours. And if there were any justice in this world, those who profit from the compliance miseries that they helped create shall be served nothing but a thin stew of bitterness, flavored by little but their own pitiful tears of regret and lament.


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