What H&R Block Doesn’t Understand about Tax Returns

[Note: In the fall of 2016, after working for H&R Block for twenty years, I wrote an essay examining how the company’s values differed from my own, and how this conflict in values had only deepened over time. I revised the essay somewhat in 2018.]

For twenty years I was a tax preparer and tax advisor at H&R Block in Helena, Montana. One day in March 2015 a corporate executive came to town. He walked around the office, asking preparers how things were going. Everybody said fine, great, couldn’t be better, all the things you say to your boss’s boss—corporate cheerleading, can’t be too positive, you know. But when he got to my desk, I asked him to sit down. I told him what all the preparers were saying in private—namely, that our new computer program, though much celebrated in company memos, was lousy, it was confusing, it didn’t flow well, it was full of errors, and if preparers weren’t diligent enough and knowledgeable enough to catch them—and most weren’t—that’s how the returns would be filed, full of errors. He asked how many of my returns I found program errors on, and I gave him an honest answer—well over half. His face got red, he didn’t believe me, he said that’s not possible. I should have shut up, I guess, I thought he might fire me on the spot, but I didn’t care, I felt so strongly about getting my clients’ returns right and I was seething because the company made that so difficult. What made matters worse, I said, was that the corporate procedure for reporting program errors was so dysfunctional it bordered on paralysis. When the receptionist phoned to say that my next client was here, the executive looked relieved, but as he walked away from my desk his irritation and disbelief were evident. Things can’t be as bad as you say.

The next week I sent him an email about a return I had just completed on which there was a program error of more than $60,000—and two days later another email, this time describing in detail a return I had just done with a program error of more than $234,000. I didn’t hear from him after that.

The job of a tax preparer is this: on every return, on every form, on every line, get every number right. In concept, it’s simple; in practice, maddeningly difficult. The preparer’s most important tool is the tax preparation program. What the piano is to the pianist, the program is to the preparer. Having a good program doesn’t make you a good preparer, any more than having a good piano makes you a good pianist; but in either case, without it you’re in trouble. You can’t play Moonlight Sonata the way it should be played on a badly tuned piano, and you can’t prepare returns the way they should be prepared on a bad tax preparation program.

But that’s what the company expected us to do. The most important part of my job as an H&R Block tax preparer was detecting and circumventing our program’s multitudinous screwups. A typical scenario: a client comes in, she’s brought all the documents and information I need, we can complete the return while she’s here. I enter everything in. Then I start going over the return with her—income, deductions, and so on—partly so she’ll understand why the return is coming out as it is, but also so I can make sure it’s correct. Then, suddenly, a problem: a figure looks wrong to me, or a figure is missing, or a figure just doesn’t belong there. Damn! I go back to the input screen to see if I entered something incorrectly. I didn’t. Then back to viewing the return, to see if the program fixed the error on its own. It didn’t. Damn it! I should be finalizing the return now, thanking the client and sending her on her way—instead I’m racking my brain trying to figure out how to override this blasted program. The phone rings: my next client is here. Crap! Stay calm, Glenn. You can do this. Focus! I start navigating through the program, and soon I’m moving from form to form, field to field, federal return to state return, input screen to view screen and back to input, the client gets dizzy just watching me, but I know what I’m doing, I’ve got it figured out now, I’ve come up with a workaround for this latest program error. I go back to the view return screen for what I hope is the last time and voila! I’ve fixed it! I’ve got the return right not because of the program but in spite of it. I finish reviewing the return with the client. She thanks me for all my hard work. Piece of cake, I say. Could I make an appointment with you for next year, she asks. You bet.

Preparing tax returns for H&R Block was like a game of whack-a-mole. Just when I thought I had vanquished all the errors the program could throw at me, another one would pop up. Except it was no game. When you prepare people’s tax returns, you’re messing with their wallets: you’re determining how much money they’ll get back or how much they’ll owe; and if you don’t get it right, you’ve betrayed their trust. Even one mistake on a return is unacceptable, because it means you have either deprived someone of money she is entitled to, or given her money she is not entitled to. A tax preparation program needs to be reliable and virtually error-free, and a company that cannot provide that has failed its preparers and, more important, its clients.

The $234,000 error I mentioned earlier occurred because the program did not carry capital gains income from the federal return to the state return. The error was extreme in its size, but in another way typical: the program’s failure to correctly carry income and deductions to the state return was something I saw every day. Whenever the program allowed, I would override these errors manually by replacing the program-generated figure with the correct figure. Had I not noticed them, however, the returns would have been transmitted with the errors in place. In the case of the $234,000 error, my clients eventually would have received a notice from the Montana Department of Revenue, whose computer system cross-checks the federal and state returns. The notice would have said that my clients underreported their income on the Montana return, because of which they now owed more than $12,000 in taxes, interest, and penalties.

Before e-filing a return, I always went over it line by line to make sure it was right. That took a lot of time, which was why other preparers usually didn’t do this. The less time you spent checking, the sooner you’d get to your next return—and the more money you’d make. Preparers generally assumed that if they input the right numbers, the program would put them in all the right places. As a result, most preparers checked their returns in a quick, cursory way. So they were almost always surprised when I told them of yet another program error I had discovered. Really? I hadn’t noticed that. Or Crap! I wonder if that’s been happening on my returns.

The program’s capacity for errors was boundless, especially on state returns: underreporting employee business expenses; omitting charitable deductions; taxing refunds that shouldn’t have been taxed; generating state credits that didn’t apply; underreporting exemption amounts; and on and on. I reported as many errors as I could, but the process was insane. I’d start by calling the 800 number for H&R Block Tech Support, punch my way through an automated menu, then listen to music punctuated by assurances that my call was extremely important to them. I could be on hold anywhere from a few minutes to over an hour. Eventually a person would pick up. I’d explain that I wanted to report an error in the tax preparation program, only to be told by the representative that he didn’t know anything about taxes or our tax program. Which was true—he didn’t. But he promised to take down my information and pass it on to someone who did. The whole system was nonsensical, like calling an insurance company and being told right off the bat that the person who would be helping you knew nothing about insurance. Anyway, I’d start explaining the problem—I’m doing this return for a client, and the federal Form 1040, Line 13, correctly reports capital gains income, but that income should carry over to the Montana return, Form 2, line 13, but it’s not doing that, and because of that the federal Adjusted Gross Income as reported on the federal Form 1040 doesn’t match the federal Adjusted Gross Income as reported on Montana Form 2, but that’s a problem, you see, because those figures have to match, that’s the first rule of Montana returns, and not only that…

Well, I felt sorry for the guy, he was trying to get all this down, but I might as well have been speaking in Swahili. We went over it several times, he tried to explain it back to me, I encouraged him when he got something right, corrected him when he got something wrong, and eventually he recited a reasonable facsimile of the problem. Then he said he’d have to put me on hold in order to escalate the issue—meaning, as best I could tell, he had to wander around the halls of H&R Block headquarters in search of someone who knew something about taxes. After a while he came back on the phone. He had spoken to someone he called an analyst, and she told him the program was working just fine, because if you added such-and-such line to such-and-such line you’d get such-and-such, which was exactly what the program was doing. But I said no, she was looking at the wrong lines, you had to compare such-and-such line with such-and-such line, and those two had to match, but they didn’t. The representative was silent for a moment, sighed quietly, then we went through the whole stinking process again, my statements followed by his restatements, until finally he got it right, more or less. Again he put me on hold. Ten minutes later he came back on the phone, said the analyst now understood what I was saying, and someone would be getting back to me. A day or two later I got an email from an “escalation support specialist” saying that what I had reported was indeed a program error, which was now being escalated to a developer.

With all this escalating going on, you’d think that such problems would be fixed in no time, but in fact it always took months and sometimes years. Some mistakes that I reported in 2014 were still occurring when I left H&R Block, two full tax seasons later. In moments of clarity, I recognized that my self-imposed mission of radically improving our program teetered somewhere between the quixotic and the Sisyphean.

Tax returns can be wrong in so many ways, and with countless returns being e-filed every day, a tax preparation company has to be nimble enough to fix its mistakes on the fly. But H&R Block’s procedure for reporting and correcting errors was so plodding, so convoluted, so bogged down in bureaucratic sludge, that you never knew if or when the problems you reported would get fixed. Who knows how many preparers, exasperated with the process, just threw up their hands—and how many errors that could have been fixed, never were.

There was another way that preparers had to fight the program—and the company—if we wanted to do what was best for our clients. H&R Block’s tax preparation fee was determined by the program. It was based on the complexity of the return; more forms and more entries meant higher charges. But sometimes the fee increase for a particular entry wasn’t fair to the client. This was especially true with entries that were optional—i.e., credits and deductions that weren’t required, but were taken only when they benefited the client. Student loan interest, for example. It took the preparer perhaps a minute to make this entry, but in many cases it increased our fee by over $40. Clients rightly regarded this as a rip-off. Sometimes the increase in our fee exceeded the benefit of the deduction. Like the return I saw where a client received $2 in earned income credit—not realizing he had paid us an extra $50 to get it. Or the eighty-year-old woman who paid us $31 to get a $10 elderly homeowner’s credit. Or the client who had a little bit of dividend income; listing the dividends as qualified in order to lower the tax rate increased his refund by $3 and his Block fee by $17.

Usually neither the client nor the preparer realized this was happening because the fee screen did not itemize each individual charge. The screen came up near the end of the interview and we passed over it quickly, often because our next client was already waiting for us. But if you knew what was going on, and were determined to put your client’s interests first, dealing with the overcharge was a headache. The program wouldn’t allow you to just reduce the fee. Instead, you would initially do the return with the optional deduction; you’d show the client what his refund was and write the figure down; you’d go to the fee screen and write down the fee; then you’d go back to the input screen and remove the deduction; you’d see what the new refund amount was; then you’d see what the new fee was, without the charge for the deduction; and finally you’d go over all these figures with the client. If the charge for the deduction was greater than its benefit, the client would of course want to leave it out. Which you would then do, since it wasn’t required. But going through this elaborate song and dance when you were trying to hurry up and finish the return was ridiculous, and it made H&R Block look like shysters. None of this would have happened if the fee screen had been programmed to never charge more for an optional deduction or credit than the benefit it provided to the client. But from the company’s perspective, that program modification would have had a huge downside—namely, less revenue pouring into the corporate coffers.

If you want to know what a company values, look at what it pays for. Tax preparers at H&R Block were basically paid for one thing: completed tax returns. During the tax season we were paid an hourly wage, but this functioned like an advance: for each preparer the amount was set so that his total wages would be well below his anticipated earnings for the season. After April 15 the company did a commission-based calculation. This was determined by the number of returns the preparer completed and how much revenue they brought in. His final paycheck would be the amount by which this calculation exceeded what he had been paid in wages up to that point. So in the end, our earnings for the tax season were determined by our productivity—i.e., how many returns we did. All of us understood what that meant. You want to make more money? Do more returns. Want to make as much money as you can? Do as many returns as you can.

On its face this criterion makes sense. We were tax preparers, so of course that’s what they paid us for: preparing returns. The problem is how much that leaves out. Here’s what they didn’t pay us for:

1) They didn’t pay us to get our returns right.

In determining compensation, it was the quantity of our returns that mattered, not their quality. The commission on a $200 return that was full of mistakes was exactly the same as on a $200 return that had everything right. If a return was wrong, who would ever know, anyway? Not the client, who just assumed we got it right; typically he’d stick his copy in a drawer at home and never give it another thought. H&R Block wouldn’t know, since the company no longer checked returns. And the IRS and the state department of revenue usually wouldn’t know, since the kinds of errors their computers can detect is so limited. Generally they detect discrepancies—between tax reporting documents and tax returns, or between federal and state returns. But most preparer mistakes aren’t like that. A preparer doesn’t ask enough questions to find all allowable business deductions; doesn’t utilize an exception to the early distribution penalty; miscalculates the capital gain on a sale of property; doesn’t use the lump-sum election to reduce taxable Social Security—these and a thousand other mistakes happen all the time and nobody catches them. Nobody. There is no way to catch them. No way, that is, other than to check each return carefully, methodically, line by line—and H&R Block stopped doing that years ago. When the company e-files a return, it has no idea whether the return is as perfect as a gemstone or a godawful mess. So it compensates them both equally. Right or wrong, you get your money. Just get it done.

2) They didn’t pay us to help other preparers.

After I’d been at H&R Block a few years, other preparers increasingly started coming to me with questions. Maybe they were confused by a tax document, and didn’t know where to enter it on the return; or they didn’t know how to fill out a particular form on the computer; or maybe they weren’t clear about the rules regarding a credit or a deduction. One day around five o’clock I had just finished my last appointment, but I knew I had to work several more hours—checking a couple of returns before e-filing them and preparing for tomorrow’s appointments. But before I got started another preparer came to me with a question. I helped her figure it out, then was about to get back to my work when another preparer came to me with a problem. Then another, and another, and another. By the time the questions stopped it was eight o’clock and I hadn’t done any of the things I needed to do. I could have handled it differently, I thought: I could have brushed people off, given them quick answers, told them I was busy. But then I thought, preparers come to me because they care about their returns, they want to get them right. They’re trying to fight their way through the thickets of tax law and the perversities of our program, but aren’t sure how to do that. I knew how disconcerting that could be—I had been there enough myself—and how utterly alone you feel when you need help and can’t get it. I couldn’t do that to people, couldn’t leave them hanging like that. So I decided then, that night, what kind of preparer I was going to be. When other preparers came to me with a problem, I’d spend as much time as it took to help them work through it—and I’d live with the consequences.

The consequences, in this case, were working more hours and making less money. The company paid me for one thing, doing returns, and every hour I spent helping other preparers with their returns was an hour I didn’t spend on my own. In this case, my next paycheck would be about fifty dollars higher because of the additional three hours I had worked; but because my end-of-season paycheck, based strictly on productivity, would later be reduced by that same fifty dollars, the net result was that I was paid nothing at all. What was added to one paycheck was subtracted from another. What the hourly calculation giveth, the productivity calculation taketh away. I was working without compensation for the nation’s largest tax preparer, volunteering my time and donating my services to this multibillion-dollar corporation. From my point of view what I had done for those three hours had been of value—to the preparers I had helped, to their clients, and even to the company, by enhancing the quality of our returns. But from the company’s point of view I had done nothing, and that’s exactly what they paid me.

3) They didn’t pay us to do tax research.

The company paid its preparers well for quick, wrong decisions, but not nearly so well for careful, researched ones.

One day I had an appointment with a couple who was new to H&R Block. They told me about their adult daughter, badly injured in an accident two years before. The daughter now required 24-hour care, so she had moved back into her parents’ home. A Medicaid program allowed the parents to provide this care, then be compensated for it. They both received W-2s for their work, totaling about $30,000.

As I talked with them, I remembered something I had read in a tax newsletter. The tax treatment of a W-2 is almost always straightforward: the preparer would input the figures into the computer, and the income would be fully taxable. But the IRS had recently issued a ruling that what were called difficulty-of-care payments might, in certain circumstances, be excluded from taxable income. A number of specific requirements had to be met, but I thought these clients might qualify.

I asked other senior tax preparers in our office if they knew anything about this ruling, but none of them did. They said if the couple had come to them, they would simply have entered the W-2s as usual and let it go at that. But I thought it was worth pursuing, so over the next month I spent a lot of time researching the ruling. I finally decided that it applied to my clients’ situation.

The impact on the return was tremendous. Instead of owing a couple of thousand dollars in taxes due to low withholding, my clients would get a refund of about that much. I spent hours writing an attachment to the return, explaining in detail why the W-2s were not included in taxable income and how my clients met all the requirements of the recent ruling. In the end both the IRS and the state of Montana agreed with me, and sent my clients the refunds they were entitled to.

In the course of my research, I also learned that the ruling could be applied retroactively. My clients had received the same kind of income the year before, and paid taxes on it, so I prepared an amended return, excluding the W-2s from taxable income and requesting a refund. When I prepared subsequent years’ returns, I did them the same way. The benefit for my clients, taking all these years together, totaled over $15,000.

And how much did the company pay me for my work? Take the original return I did. The charge for the return, as determined by our computer program, was about $250. Like all our fees, this was based on the kinds of income and deductions that appeared on the return, and did not reflect any research time. Of the $250, H&R Block paid me about $60. But for the real work on this return—the research I had done and the write-up I had prepared—the company paid me nothing. During the weeks I was doing the work, of course, they paid me for all my hours; but because these wages were later subtracted from my total earnings for the tax season, and because those earnings were based strictly on productivity, my net income for this return was $60. Taking the research and write-up into account, I put more than twenty hours into the return. So I made less than $3 an hour, roughly one-third of Montana’s minimum wage.

You want to make more money? Do more returns.

In terms of the bottom line—both the company’s and my own—it would have been better if I’d never gone down this rabbit hole. Just enter the W-2s and get on to the next return. In that case I would have completed this return in about three hours, then used the other seventeen-plus hours to do, say, another six returns. Altogether, I would have generated seven times as much revenue for the company, and seven times as much income for me. The way the company compensated its preparers sent a clear message: the less time you spend on a return, the more money you’ll make. Faster returns and more of them—that was the H&R Block ideal. Had I allowed that corporate mentality to rush me through this return, the only losers would have been my clients, a family doing the best they could to cope with the aftermath of a terrible accident.

Every tax season I spent a lot of time researching issues that came up, delving deeply into IRS publications that were almost Kantian in their complexity, trying to find the pathways that would yield the best possible outcomes for my clients. And because other preparers trusted my ability to navigate through tax publications and instructions, they often came to me with similar questions of their own. I knew the company wouldn’t pay me for any of this, but it had to be done, so I did it.

4) They didn’t pay us to fix the program.

The company considered me an excellent tax preparer. H&R Block had about fifteen certification levels, designed to reflect a preparer’s knowledge of tax law. I was at the highest level, Master Tax Advisor. To reach this, I had to pass a series of IRS tests and become an Enrolled Agent; this allowed me to represent any taxpayer on any tax matter before the IRS. The company put a lot of emphasis on retention rate—what percentage of the clients you served one year came back the next—and mine was always high, sometimes the highest in the district. Most of my clients came back to me year after year; I did returns for some of them all twenty years I was there. My last two years at H&R Block, the company ranked its preparers on a percentile scale; I was in the top one percent. So by these sorts of metrics, I did pretty well.

As a result, the company wanted me to do everything I could to improve our tax preparation program. They asked me to participate in phone conferences and, especially, to report program errors. I invested countless hours in this. But because my income for the tax season was determined by how many returns I completed, and because this work didn’t increase that number, I didn’t get paid for any of it.

Did I think that was fair? Not really. But I did it because it beat the alternative. Given a choice between trying to improve our program and getting paid nothing, or not trying to improve our program and again getting paid nothing, I chose the first. At least that held out the possibility that I could make things a little better for myself, our clients, and the preparers I worked with.

The company, of course, would claim that it cared deeply about all these things. It is vitally important to us that you do your returns carefully and correctly, that you help other preparers, that you research all tax questions thoroughly, and that you do everything you can to improve our program. H&R Block wanted these things so badly that for doing them, it paid us exactly nothing. You can tell what a company cares about by what it incentivizes—and what it doesn’t.

According to its annual report, in 2016 H&R Block had over 10,000 offices in the U.S., where it prepared some 12 million returns for which it was paid about 1.9 billion dollars. That year my average return cost $291. A couple of returns that I did cost only $20, a couple of others cost over $1000, but most were in the $150-$400 range. Every year I did a lot of tax training and studying in the fall, but mostly I worked from early January through April 15. The days were long: typically I’d get to the office about eight in the morning and get out of there about nine at night, minus an hour when I’d dash home to take care of our Westie. I did that Monday through Friday, then put in another five or ten hours over the weekend. During those months, it felt like all I did was work. I retired in May 2016, just before my 66th birthday.

When I started working for H&R Block, in January of 1997, every return done by every preparer had to be checked by another preparer before it could be e-filed. Even though we did all our returns on the computer—by that time, the company’s pencil-and-paper days were long gone—the possibilities for errors and omissions were nearly limitless. Using a computer program no more guarantees that you will do a return correctly than using a power saw guarantees that you will frame a roof correctly.

Two of our most knowledgeable tax professionals worked in quality control, checking returns and answering preparers’ questions. Other preparers checked returns on an as-needed basis. Sometimes in the evening our back room would be filled with preparers—not working on their own returns but checking the returns of others. If a checker found a mistake on one of your returns, she’d write it up on a gold piece of paper and put it in your box. You would have to fix it, and notify the client of the change, before you could transmit the return. Nothing felt better than coming to work in the morning and finding no “goldies” in your box.

Knowing that our returns would be checked made us try that much harder to get them right. The blow to your professional pride when another preparer found errors in your work; the hassle of going back to a return you thought you had finished; the chagrin you felt when telling a client that you made a mistake on her return—all of this motivated us to get every return right.

Over the next few years, however, checking was eliminated. Instead of sending returns to quality control, preparers would e-file them right from their desks, usually while the client was still there. Even the least experienced, least knowledgeable, most error-prone preparers had no one reviewing their work. If a return seemed okay to them, they’d transmit it—seen by no one, checked by no one, corrected by no one. From the company’s perspective, it was a win-win: H&R Block no longer had to pay for checking returns, and preparers no longer had to spend time fixing them. What a boon for profits and productivity! It was the completion of the return that mattered, not its correctness.

The elimination of checking was part of a larger pattern of change within the company. My first couple of years there, we had meetings throughout the tax season to go over problems preparers were having and mistakes they were making. Later this was reduced to one mid-season meeting, and finally even this was eliminated.

At the same time, the availability of help for tax preparers was evaporating. My first few years, I went to the quality control supervisor whenever I was unsure about a tax form or tax rule—which for me at that time was an almost daily occurrence. “You must consider me an endless fount of questions,” I said to her one day. Tax rules are intricate and esoteric, with obscure provisions of astonishing specificity alternating with IRS texts that sometimes are as ambiguous and as impenetrable as Delphic proclamations. In the labyrinthine world of tax preparation, every rule has its exceptions, and every exception has exceptions of its own. Mastering these is a long and difficult process.

When checking was eliminated, it was replaced by a district tax specialist who came through our office once a week and sent out occasional memos on preparer errors he was seeing and tax questions he was hearing. When that position, too, was eliminated, it meant that now no one was monitoring the quality of our returns in even the most cursory fashion. It also meant that if a preparer needed help, the only person he could turn to now was another preparer, especially a senior tax preparer. But since we all had our own clients and our own returns we were struggling to keep up with, we were often unavailable.

All this happened between the late 1990s and the early 2010s. Checking—gone! Meetings—gone! Quality control—gone! A new corporate mentality took over. All these things cost money—can’t we get rid of them?

I found these changes disturbing. To me a tax preparation company has one solemn responsibility: get each return right. We owed it to the clients, to the law, and to ourselves. I wanted to make money, yes, that’s why I was working—but getting my returns right mattered more to me than anything.

Not to H&R Block, however. In its determination to cut costs and pump up profits, the company had abandoned its responsibility to ensure the accuracy of its returns. More clients! More returns! Bigger commissions! That was the company drumbeat—we heard it constantly. The focus was always on more returns, never on better returns. From the company’s point of view, it made perfect sense to stop checking returns—because it’s more profitable to pay claims on the small percentage of errors that the IRS and the state will detect than it would be to find and correct all the errors that are made.

At H&R Block the human proclivity for errors was exacerbated by a corporate culture in which cost-cutting was the holy grail and Do it right gave way to Do it fast. Every day I saw the consequences of these policies. In preparing for my appointments, I would carefully review a client’s prior-year return whenever it was available. Sometimes the return had been done by another H&R Block preparer. In many cases the returns looked good to me—but just as often, they didn’t. In talking with the client I might realize that the earned income credit had been claimed when it shouldn’t have been—or hadn’t been claimed when it should have been. I would see errors on tip income or the meal deduction for truck drivers or the nontaxable portion of a pension or… The possibilities were endless. Completing a certain number of hours of continuing education does not make someone a painstaking, proficient preparer; passing an open-book, multiple-choice test does not mean that he or she has mastered the intricacies of federal and state returns. It takes much more than that. And that’s what H&R Block doesn’t understand about tax returns: they’re very easy to get wrong, very hard to get right.

Even our most experienced preparers frequently made mistakes on their returns. Being experienced was no guarantee against errors; being knowledgeable was no guarantee against omissions. Maybe a twenty-year pro was flying through a screen of questions and misunderstood a single one, putting No where she should have put Yes, or Yes where she should have put No, and as a result a credit was miscalculated or depreciation was omitted. Experienced preparers generally got the basics right, but not necessarily the more difficult parts of a return—the arcane rules of the energy and education credits, for example, or the complexities of a brokerage statement, or the many special adjustments required on a state return.

And what were the consequences of these errors? Well, other than the federal and state returns being wrong and the refund or balance-due amounts being incorrect, absolutely nothing. The preparers obviously didn’t know they had made the mistakes; the clients never realized it; and neither the IRS nor the state computers had any way of detecting them. The company got its money and the preparers got their commissions. I saw this all the time: returns riddled with errors were filed and accepted, and nobody ever knew. Nobody knows and everybody’s happy. What could be better than that?

H&R Block does a lot of promotions for its Second Look program. A person could bring in his tax returns for the last three years, prepared either by himself or by another tax preparation company, and one of our preparers would check them at no charge. The idea was that our preparers were so sharp we could find credits and deductions that other preparers overlooked. Then, for a modest fee, we could amend the return and the client would get a nice refund. In practice, I found the opposite to be true: when a return was incorrect, it was usually because a credit or deduction had been improperly claimed. If the client wanted me to amend it, I could, but he would then owe additional taxes. (Usually he politely declined.) Anyway, that H&R Block devised such a program seemed to me a little screwy: a few years after we stopped reviewing our own returns, we started trumpeting our expertise in reviewing everyone else’s. We were looking for the speck in the other guy’s eye while ignoring the log in our own. The slogan for the Second Look program is We Find Money Others Miss; but in the interest of full disclosure, perhaps it should be We Check Everyone’s Returns But Our Own.

Late one afternoon in 2016, I met with a married couple whose returns H&R Block had been doing for years. They told me that last year’s experience had been a nightmare. Their return had been done by a senior tax preparer, one of our top producers, and after he gave them the finished return they did what few of our clients ever did: they went home and looked it over. They found a number of omissions, and had to meet with the preparer several times before he finally got everything entered. Now, as we talked about their tax situation this year, they asked if I would check last year’s return to make sure it was right. I said I would.

I met with them one evening a couple of weeks later. I wanted them to be confident about this year’s return so I went over it in detail, showing them where each figure had come from. The return was complicated, so this took over an hour, but they appreciated it, and left the office knowing the return was right.

The prior year’s return, however, was a different matter. I showed them how even in its final form it had multiple problems: the preparer mistakenly double-entered the mortgage interest figure, making the deduction twice as big as it should have been; he reported bond income that should have been nontaxable as taxable; he deducted mortgage insurance premiums which, because of the the couple’s income level, were not deductible; and he miscalculated the home office deduction, making it much smaller than it should have been.

As I went over these and other mistakes, the couple became increasingly quiet. They seemed stunned, not understanding how a return for which they had paid some $400 could be so screwed up. I told them that H&R Block could fix the return at no charge—but added that they would probably owe additional tax because the biggest error had been the improper doubling up of the mortgage interest deduction. They looked crestfallen.

After a while the wife said, “God, how could this happen? Don’t you guys check each other’s returns?”

I shook my head.

“We used to,” I said. “But that was a long time ago.”