-- H & R Block's software oddly put $650 down as the amount the client owes for excess advance payment of PTC.
-- The H & R Block generated form 1040 shows the IRS owes the client a refund of $3350 ( = 4000 - $650).
-- Per pandemic relief legislation and the IRS, no repayment is required in 2020. See https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit#suspension
The suspension of APTC repayments for 2020 was in the
American Rescue Plan Act, which wasn't signed until March
11, 2021. Is it possible that your client's return was filed
before then, or at least before H&R Block was able to revise
their software for the retroactive provisions in the new
law?
-- The Taxslayer Form 1040 correctly shows the client owing no PTC repayment and states the IRS owes the client a refund of $4000.
The 2020 TaxSlayer software that you are using now was
certainly updated long ago for the retroactive change. I'm
sure H&R Block's 2020 software was also updated long ago,
but perhaps not until after your client's return was filed.
Is it possible that H & R Block e-filed the client's 2020 return; the IRS saw the "error"; and issued a refund of $4000 to H & R Block on behalf of the client? Then H & R Block took not only its $300 but also the $650? Is this perhaps even likely?
It's possible. The IRS said they would automatically refund
any repayments of excess APTC that were filed before the new
law was passed. H&R Block might have mishandled the
additional refund. Maybe their records just indicated that
they owed the client $3,050, and they didn't notice that the
refund was more than expected. Or, depending on the timing,
the additional refund might have been sent as a separate
payment, and H&R Block failed to recognize what it was and
pass it on to the client. Whatever happened, I think it's
more likely due to incompetence or innocent confusion about
adapting to the retroactive change in the law, rather than
malfeasance.
I have doubts that a VITA volunteer can even amend the 2020 H & R Block return, since I think it's possible H & R Block pocketed the $650 that should have gone to the innocent, low income client.
No amended return should be necessary. The IRS should have
made the adjustment automatically. Maybe when you and the
client complain, H&R Block will realize what happened and
give the client the refund without any fuss. Maybe they've
even already seen other cases like this and are aware of the
problem.
Any other suggestions for now?
The client can get a Tax Return Transcript and a Tax Account
Transcript, or check her IRS account online, and see what
was actually filed and what payments were sent. If she can't
deal with the process of establishing an online account, she
can get the transcripts by mail or request mailed
transcripts by phone.
Bob Sandler
--
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