Mike "The Situation" Sorrentino is facing serious legal issues together with his brother Marc Sorrentino. The duo have been indicted by the Department of Justice on various charges, including tax evasion and structuring and falsifying records. These fresh charges add...read more
Is Turbo Tax responsible for any errors they make on your taxes? According to a recent United States Tax Court ruling, it is the consumer who is responsible for any errors or inaccurate financial information submitted to the IRS. The ruling was reached on May 11, 2017 by Judge Holmes.
Barry Bulakites, an insurance consultant, was the petitioner in the recently closed Turbo Tax case. Mr. Bulakites believed that he had evidence to prove that he was tricked into claiming more deductions than what he would normally be allowed to claim through usage of the Turbo Tax software to file his 2011 and 2012 returns.
The taxation issue was partly due to alimony that was paid to Mr. Bulakite’s ex-wife following a divorce settlement. In the divorce decree, a sum of $2,000 was supposed to be paid in monthly installments. Mr. Bulakites offered to pay a larger sum of $5000 to “do the right thing” during the 2008 financial crisis to help his wife since both parties were unable to sell their interests in a home that they shared together.
The additional money that was paid to Mr. Bulakite’s ex-wife was written off as an alimony deduction on the 2011 and 2012 tax returns. Since the extra $3000 per month was not allowed to be written off under current IRS tax laws as an interest deduction, $79,000 could not be claimed or proven as interest or principal.
Other expenses that were originally claimed in the aforementioned tax years by Mr. Bulakite include interest from a note that was secured through owned real estate. The deducted amount of $185,673 was mistakenly inputted into the Turbo Tax software as a carry forward of net operating loss for the previous tax year.
Because no documentation was provided by Mr. Bulakite that showed a detailed schedule of operating loss deductions, the total amount was not allowed to be deducted, meaning no entitlement of reduced taxes. Mistakes made during the input of financial information into the Turbo Tax software by Mr. Bulakite were not found to be reasonable or in good faith by the United States Tax Court.
In his final decision, Judge Holmes cited a previous ruling known as “Bunney v. Commissioner, 114 T.C. 259, 267 (2000)” that states that taxation software is only as good as the information that someone inputs into it for the preparation and filing of state and federal tax forms for electronic or hard copy delivery.
The decision will now be entered under Rule 155 which is the Computation by Parties for Entry of Decision in all US Tax Court matters. Consumers can protect themselves by inspecting 1040, 1099 or other taxation forms for numerical errors prior to using Turbo Tax.
Turbo Tax does offer a 100% Accurate Calculation Guarantee for consumers. This guarantee is subject to a number of regulations, and it provides only a 60-day error window starting with the date a penalty assessment notice is received. Consumers are still required to respond to requests by the … Read More