Tax glitch causes return problem

TERRE HAUTE, Ind. (WTHI) - The thousands of college students, who applied for the government’s tax credit based on the tuition they pay, Form 8863 as it’s called, are being asked by the IRS to wait an additional four to six weeks while their tax return paperwork is being reprocessed.

Form 8863 has been available for years, but has never created the problems for filers eligible for that tax break, according to Michael Perkins, an enrolled agent at Larrison’s Tax Service in Terre Haute.

Perkins said a portion of the Form is unable to be read by the IRS’s computers.

“There are two lines on this form that the IRS cannot process,” Perkins told News 10. “And when it can’t process those two lines, then it can’t process that form.”

Many of those who are victims of this virtual glitch have blamed tax preparing giant H&R Block. But Perkins blames the IRS, explaining that the IRS authors the Form 8863 itself, then signs off on any and all software created to process such forms.

On Wednesday afternoon, the IRS issued the following statement:

The IRS is aware of a problem with a limited number of software company products that affected some taxpayers filing Form 8863, Education Credits, between Feb. 14 and Feb. 22. The problem resulted in those tax returns requiring additional review by the IRS.

The IRS is continuing to review the situation and working with affected software companies to assist in the processing of these tax returns. Typically, the review process for a situation like this takes up to 8 weeks. We are taking special steps to help taxpayers. This means the IRS may need as much as 4-6 weeks from this date to issue a refund to the taxpayer. While the number of tax returns affected is around 10 percent of the total returns claiming the credit, the IRS continues working aggressively to address this situation and hopes to reduce those projected refund time frames further.

Taxpayers who filed a Form 8863 with their tax return during this time period can check “Where’s My Refund?” on IRS.gov to determine the status of their refund. If taxpayers have not received a refund date and filed during the affected period, they should contact their software provider to determine if they may be in the affected group.

The IRS reminds taxpayers that "Where's My Refund?" is usually updated overnight, so taxpayers don't need to check “Where's My Refund?” more than once a day.