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Alabama Turbo Tax Errors


Lee B

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Alabama State TurboTax Software

 

Intuit is helping taxpayers in Alabama after errors were uncovered in its state income tax software that led some taxpayers to inadvertently overpay or underpay their taxes.

The company is working with Alabama’s Department of Revenue on an outreach effort after errors were found in Intuit’s TurboTax Alabama state tax software. The company said the errors mostly occurred in uncommon tax situations and have now been fixed. Intuit is helping Alabama taxpayers amend and resubmit their state tax returns so they can claim an additional refund or pay any balance that may be due.

“Each year, Intuit helps millions of taxpayers and tax professionals successfully file complete and accurate tax returns,” said Intuit vice president Bob Meighan in a statement Wednesday. “Any error is important to us and our customers can rest assured that we’ll work diligently to resolve it. Intuit takes responsibility for the accuracy of our tax products. As part of our continuous quality assurance process, when we discover an error we take the necessary and appropriate steps to resolve it. We stand behind our Accuracy Guarantee and will reimburse TurboTax customers for penalties or interest.

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I could be wrong, but I thought all software had to be "approved," first by IRS systems and then by each state.  Some states take their dear time, especially with entities.  I often have a 1041 all ready to go for federal but I have to hold back until the particular state is released.  Sounds like AL didn't do its scrutiny?  Just maybe the states take the easy way out:  if it's good enough for IRS, it's good enough for us.

CT passed a secret tax hike this year (well, lowered the AGI thresholds where people could claim the full property tax credit--I call that a tax hike) and didn't tell anyone about it.  They didn't even tell their own programmers never mind the tax prep or software developer communities. No one noticed until the later half of March, after many folks had already filed.  You would think they would have waited until after April 15 to notify everyone, but they didn't.  In the height of tax season we were taking a dozen calls a day from people who got letters from the state demanding more money.

What is with these states?  Why did AL not notice the error when it approved the software?  Why did CT not notice at all? (I know the answer to that one--didn't want anyone to know.)  Is the onus on us preparers?  We know to comb through every completed federal return to be sure it is accurate, but errors are usually our fault--forgot to enter state withholding or to check a box that taxpayers had insurance.  That's what diagnostics are for.  And when we get an odd tax situation we often do the math by hand to be sure the software handled it correctly.  It has never occurred to me to check the basic applications of state software--I just assume it was approved by the state and is accurate.

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SaraEA,

I cannot speak for anything other than what we do.  In our case, such as W-2 and W-3, the SSA approves us annually for printing the form in black and white format.  They do not check for data accuracy.  What they do check is a blank form being scan-able, and a form with dummy data is scan-able.  For testing, they prefer all fields be filled in, and filled in to the max length we will use.  So our test forms contain 99999999.99 for all figures, 20 to 30 "W" for text fields, and with ALL check boxes checked.  Clearly, they have no care as to the accuracy of actual figures and text.  Same for the state forms we directly print.  Same for any e-data we prepare.

Most tax agencies do not have an "approval" process.  A few have an over the top process.  Those with an approval process have one reason in mind, and it is not accuracy.  It is to stay within their budget, by reducing the number of forms requiring manual handling.  (There may be one or two who have approval processes to ensure they have a budget/paycheck, but that is pure speculation :).)

Thankfully, expertise is still needed, or we would all be looking for work.  The OP is a great reminder that we have to exercise our expertise.

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I wasn't talking about forms but about tax software.  The IRS has to approve all federal tax software, and the states do the same with the state versions.  I'm thinking credits, taxability of pensions and Soc Sec that may differ from the federal amounts, state allowed itemized deductions and depreciation, etc.  Am I wrong?

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This is so very simple to understand.

Someone in the State of Alabama tax department in charge of testing the software messed up.

This means that some taxpayers will get a refund and some will owe tax.

As preparers, we are not to take for granted that the software is correct.  We must have a working knowledge of how the State taxes work.  Therefore, some of the blame rests with the preparers.  

At the firm where I work part time, we do tax returns for all 50 states.  Believe you me, the differences between states are many and have no consistency whatsoever.  Throw a multi-state return in the mix and the necessary diligence increases exponentially.  

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Jack,

That assumes AL actually tests the software (I doubt it) rather than the results.  The IRS does not test software, just the results, and the IRS is very clear that their test data does not cover all scenarios.

https://revenue.alabama.gov/incometax/software_vendors.cfm

You made me look...

AL first requires the software to have been IRS approved.  We know now the IRS approval is not reliable.  Since AL talks about their schemas, I suspect their testing is similar to the IRS.  The vendor submits the RESULTS of what their software creates, and AL washes it through some sort of verification.  Whether or not the vendor tests all possible scenarios, or whether or not AL requires certain scenarios to be tested is not clear from their main vendor page.  Even it the IRS or a state had built some sort of test data for all possible scenarios (unlikely), how would the IRS or state actually know the data was not manually created?  Don;'t for a minute think the vendor has to send their software to a tax agency and the tax agency has someone who can operate the software for testing purposes.  The onus is always on the software vendor, and those using the software.

In other words, your only guarantee is your own review and maybe what the software vendor provides.  There is absolutely no guarantee from the taxing agency that the software they show as approved will be accurate, or was even used to make the test data which garnered the approval.  Remember, the taxing agency is going to do at little as possible in their testing, as they are only looking to make their job easier (not have to manually process data).

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