Last year H&R Block told the IRS that reader Tuyen made $33,000 in charitable donations. Tuyen, who earns $60,000 per year, collected a huge rebate, but when he returned to H&R Block this year, he learned that thanks to the screwup he now owes the IRS $10,000 in back taxes.

Tuyen writes:

Last year, I had my 2007 taxes done by HR Block and received a whopping refund. My tax representative told me I was getting such a big refund back due to overpaying taxes on my stock exchange. I didn’t question this because I really don’t know much about taxes and was happy with their guarantee policy. I did still opt for their piece of mind insurance which is $30.

This year, I went back to HR Block, but to a new accountant, since I’ve moved counties. He looked over my taxes this year and then cross referenced last year and asked me why I donated over $33k in 2007. I make $60k and definitely did not claim any donations last year at all. Long story short, the lady last year f’d up royally. I shouldn’t have received a refund at all last year and now I owe over $10k to the IRS.

Having purchased their Piece of Mind Insurance and being aware of their guarantee, I felt pretty good about having HR Block cover for their mistakes.

Well, it turns out, they will only cover $5k of it and for the $5k they give me, I’ll have to report as income next year and pay taxes on that. All and all, I’m thinking this will set me back another $2k, with HR Block only shelling out $3k, if that.

Great work, H&R Block!

(Photo: The Consumerist)

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.