Commercial Software Vendors Settle with Vermont over Tax Preparation Issues

01 September 2016

The Vermont Department of Taxes is pleased to announce that Liberty Tax Service and Lamson Tech/1040NOW have made good faith contributions to the State of Vermont to remedy an extraordinary issue caused by unusually high error rates in some returns completed using their commercial tax preparation software. CCH Small Firm Services has also agreed to make a similar contribution. Earlier on July 5, the department announced that Intuit and H&R Block had made similar good faith contributions for errors in their own software.

Taxpayers whose 2015 returns were impacted by certain commercial vendor software issues related to itemized deductions will not be required to amend or pay any additional tax. The department stopped processing any such amendments that it received after June 29 and has refunded any payments received related to such amendments prior to that date. These good faith contributions by tax preparation software companies have allowed the department to take this extraordinary action.

As previously announced, the department learned in April that several tax preparation software products did not automatically prompt or route users with itemized deductions to submit the IN-155 form, which calculated new statutory limitations for certain deductions. As a result, certain taxpayers underpaid their 2015 taxes, due April 15, 2016. The impacted software products have all been changed so that users are automatically prompted or routed to the form.

In early July, Intuit and H&R Block made payments to Vermont's General Fund. As of today, the department has signed agreements with the remaining software companies involved in these errors. Liberty Tax Services has contributed $12,169.00; Lamson Tech/1040NOW has contributed $496.00; and CCH Small Firm Services will contribute $67,994.00.

Commissioner Mary Peterson stated, "We are very happy that all affected software companies have stepped forward to make a significant contribution to the state to address this matter. Taxpayers who were impacted by filing an original return containing the IN-155 software-generated errors need to take no further action, regardless of the product they used. Even the small group of taxpayers who did file an amendment need to take no further action. They will soon be receiving correspondence from the department explaining how the abatement of additional liability has been resolved, either with destruction of their check or a refund."

Taxpayers who believe they may have been impacted by the 2015 vendor software errors can find further information on our website at www.tax.vermont.gov or contact the department at 1-866-348-4038. Any impacted taxpayer who already sent the department their amendment and payment related to the IN-155 errors will receive a refund from the department. As of today, the department has completed all known refunds and abatement letters related to this issue. Taxpayers who have not yet amended need not take any further action. Any taxpayer who correctly submitted an IN-155 and paid the correct tax amount before April 15, without amendment, is not impacted. Likewise, extension filers whose return is due by Oct. 15 are also not considered impacted.

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