2015 Tax Preparation Software Errors, Your Action May Be Needed
The Vermont Department of Taxes has learned of systemic errors in the coding of Vermont 2015 tax year personal income tax software, including professional series software used by some practitioners. The software generated incorrect returns that understated tax liability for some filers who itemized deductions. We are striving to minimize the impact of these errors on taxpayers and the Department. If you used such software to prepare returns, we ask that you work expeditiously to assist your customers. The Department will waive penalty and interest if amended IN-155 returns and payments are received on or before June 30, 2016.
Vermont had two important 2015 deduction changes reflected on schedule IN-155.
- The first requires the addback of any deduction taken at the federal level for state and local income taxes (IN-155, Part A).
- The second requires the capping of certain deductions (IN-155, Part B).
We are aware that some software products sold to preparers (and directly to taxpayers) erroneously bypassed the IN-155 calculations in some circumstances. The affected taxpayers' personal income tax returns were submitted without an IN-155, or with an incomplete IN-155, and likely understated tax liability. Taxpayers need to file amended IN-111 and IN-155 forms with the Department and pay any additional tax due.
Our website lists products that our analysis suggests had issues for part or all of the filing season, and we have been in contact with these vendors. The products include:
Lamson Tech / 1040NOW
We File Inc. (Liberty Tax Service)
Intuit Turbo Tax
H&R Block at Home - DIY Desktop Software
Intuit Pro Series
Liberty Tax Service
CCH Small Firm Services (ATX)
Amend On or Before June 30
The Department is requesting that you give special attention to assisting any of your impacted clients by June 30, 2016. We will waive penalty and interest for amended IN-155 returns received by that date. Amended IN-155 returns received through October 15, 2016 will be assessed interest only.
In this instance only, we ask that amended IN-155 returns be sent with paper check attached to the following special PO Box:
PO Box 1500
Montpelier, VT 05633
Please note that, in this special instance only, the most expeditious processing is accomplished through a paper return with check attached. This will avoid unnecessary programming of our soon-to-be-obsolete legacy systems.
Need For Action
Please note that the Department cannot offer automated solutions to address these commercial software errors. We cannot identify all of the affected taxpayers until we receive federal return data from the IRS late in the fall. Moreover, we are in the critical phase of the Department's modernization project; retiring our legacy processing system for personal income tax after the 2015 tax season and going live with our new VTax system in December. The Department cannot perform complete 2015 assessment runs on the IN-155 until after January 1, 2017.
In the interim, it is important that you work with your clients to correct their 2015 itemized returns as soon as possible to avoid additional penalties and interest that may accrue if we need to issue 2015 assessments. Again, the Department will waive penalty and interest for any amended IN-155 return on or before June 30, 2016, and then assess interest only until October 15, 2016.
Please note that the Department will refer taxpayer questions about amending returns to the appropriate vendor or preparer. Once the taxpayer has an amended return, we will be able to entertain questions regarding payment.
Guard Against SPOOFING!
As you know, fraud has been reported in connection with tax filings. Spoofing is a scam where emails that appear to be from a trusted contact seek personal information such as Social Security numbers, W-2 wages or passwords. These emails have been directed to taxpayers, businesses and tax preparers. Do not be fooled into providing such information in an email response or by clicking on an attachment that leads you to a phony website. When in doubt, initiate your own secure correspondence to ensure the authenticity of the recipient and encourage your clients to do the same.
We are grateful for our partnership with practitioners in serving Vermont taxpayers. Thank you for your prompt attention to this matter.