Can I sue TurboTax?

[ptownjab]

What is the name of your state? Virginia

I filed my 2005 federal and state taxes using TurboTax Online, via their website. When I did so, I entered ~$8,000 as federal taxes with held on my W-2. Last week, I received some mail from the IRS stating that my federal return had ~$12,000 reported, exactly $4,000 more than I had originally reported.

The first thing I did was go to TurboTax's website, and download my 2005 return, which did in fact have the correct number. It appears, that even though I entered one number, TurboTax reported another number. Now the IRS wants a check for $4,000 + interest. I have no recollection of what my federal refund actually was, as back in those days I was still single running the streets. Now I'm married, so I track every nickel we spend. I consulted my credit union, and since they had a major overhaul of their computer systems in 2006, they no longer have records that I can access to verify the over payment by the IRS.

TurboTax has basically told me that they have done nothing wrong. Is there any recourse I can pursue against TurboTax to have them pay the $4,000 (of course I'd have to collect that as income on this year's return)? Perhaps civil damages? I don't want a penny more than the IRS would make me pay.
Thanks

 

[racer72]

My question to you, did you not not notice that your tax return did not match the one you filed? And who spent this $4000? If it was you, then you owe the money, not Turbo Tax.

 

[Rexlan]

I agree with racer72.

The tax, either way, is your liability. If Turbo Tax made an error they would only incur your damages ... the penalty/interest.

It is also very unlikely that Turbo Tax made an error. You submitted the information electronically and computers just do not substitute numbers or make mistakes. They either work or they are broken ... no middle ground there. The data should not have been handled by a human once you submitted it.

I have used Turbo Tax for 15 years+ and I have never heard about going to their site to download my tax return???

As racer72 also points out. How could you not know that your refund was far too much? If you are paying that much tax you must not be an idiot .... leads me to believe you knew something was not right but chose to ignore it and keep the $$.

 

[tranquility]

At some point you were informed regarding the licensing agreement with Turbotax. It was astonishing (even though I haven't read it). They pretty much told you everything was your responsibility and, it will stand up in court. So, no--you can't win a lawsuit. (But, yes--you can sue.)

The bill from the IRS is for your taxes owed. You (or an error in the program) said you had $4,000 more put in that you actually did. The final payment/refund amount reflected this. The IRS usually checks the amount paid before issuing a refund, but sometimes will refund if there is a W-2 attached early in the year before Social Security Administration inputs the information from the employer. When they did find out, they want that money plus penalties and interest if appropriate. That is all you are out, the penalties and interest. But, as I said, the licensing agreement you clicked on when you signed up to do the return will limit any remedies you can have against Turbotax. Read it and see for yourself.

 

[ptownjab]

My question to you, did you not not notice that your tax return did not match the one you filed? And who spent this $4000? If it was you, then you owe the money, not Turbo Tax.

Racer:
Regarding your question ... my tax return matched what I filed. I have a copy of it in hand and IT IS correct. The problem is that Turbo Tax did not report the same values that printed out on my return. They reported $4,000 more as taxes withheld that what was actually withheld...resulting in an IRS overpayment of $4,000

So the problem is that Turbo Tax did not report what was input...I don't know why

 

[racer72]

What happened to this $4000 overpayment?

 

[Zigner]

It's easy (and has been alluded to already)...you are responsible for the $4,000 and Turbotax should cover the penalties and interest.
The web site says "If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest."