Thousands of people who filed Vermont tax returns are off the hook for problems with commercial software that resulted in underpayments of 2015 state taxes.
The underpayments by about 15,000 filers who used itemized returns were due to problems in popular software from companies such as H&R Block and Intuit, which markets TurboTax.
As a result the two companies have agreed to pay the state about $2.4 million.
Tax commissioner Mary Peterson says normally the taxpayer is responsible for an underpayment even if the software or preparer is at fault.
“If we had to initiate collection efforts, you don’t get the full amount from everybody when you start going down that path,” says Peterson. “This way, the state gets its money immediately. So then we were able to say to the individual taxpayers that we’re actually abating the tax, which is very unusual.”
Peterson says Intuit is contributing $2.375 million to offset the loss in tax revenue and H&R Block is paying $44,000. The figures are based on the number of Vermont tax filers using each company’s software.
The state has also requested contributions from three other software vendors to make up the balance of an estimated $2.75 million in unpaid taxes.
The tax department says those who have submitted payments as a result of the software problems will receive refunds.
Due to software coding errors discovered in April, many taxpayers who itemized deductions were not instructed to submit a form which calculated limitations on certain deductions.
