The difference I see between the paper and electronic filing, is that with paper there was a box labeled "Donate Kicker" that was checked, which you could clearly and easily see before it was signed. If you filed electronically, you don't have the ability to see anything similar. (As you said the screen you can see just has an unlabeled X floating in space.) Now if the donate kicker was only contained inside the 2D barcode, then I would say it should be treated just like the electronic filers, since human can't easily read and understand the 2D barcode.

Just like any contract, the person should completely read, understand, and agree with it before signing it.

If you open it so that someone can claim no that isn't what I selected/agreed to even though it is plainly on the paper I signed, I would think that opens a whole world of problems, couldn't it apply to deductions, donations, dependents, or anything else on the form as well?

which you could clearly and easily see before it was signed.

Not on any screen. How many times should you have to read the form before signing it? I think every user has a reasonable expectation that the form that appears on the screen is exactly the same as the form that is going to be printed out on paper.

If you filed electronically, you don't have the ability to see anything similar.

Whose fault is that? Shouldn't the e-filer have to print out the paper return and review it, just as you're making the paper filer do?

Just like any contract, the person should completely read, understand, and agree with it before signing it.

Isn't the e-filer electronically signing what was e-filed? If not, the whole e-return is not valid. And what was e-filed in the cases in question here had the "Donate kicker" box checked -- otherwise, they all would have gotten their refunds.

couldn't it apply to deductions, donations, dependents, or anything else on the form as well?

Only if TurboTax is allowed by the DOR to continue to sell a product in which the form you see on the screen is not what actually prints out on paper. If the program shows a deduction or credit on the screen, but then doesn't take that deduction or credit on the paper form printed out, I would think that the taxpayer should be entitled to correct the mistake and get a refund -- even if the law said that "failure" to "claim" the deduction was an irrevocable "election."

Remember, too, that the state bears some responsibility for this; it reviewed the TurboTax product before it was sold.

The state's position seems grossly unfair. On the other hand, we've had the concept of "unintended elections" at least since the presidential one in 2000.

This is the tax version of the hanging chad, I think.

'dimpled' chad. Dimpled chads don't count, either, like 2-corner hanging and 1-corner hanging chads.

Just for the record, this problem doesn't only affect Turbo Tax users. There are a number of documented cases that I'm aware of where people who used H & R Block's Tax Cut, TaxAct, and MacInTax experienced similar problems. The numbers are small and the reports are not as widely publicized. While there is no escape from the fact that the Turbo Tax problem can be documented and that there is clearly something wrong with the way Intuit implemented the kicker instructions in Turbo Tax, I'm still betting that the ultimate smoking gun will be found in the instructions issued by the DOR to tax software preparers. Lessons learnt from writing code is that the first thing to be done is to get a clear problem statement from the client, in this case, the DOR. If the client's instructions are ambiguous, vague, or susceptible to multiple interpretations, the programmer should go back for clearer instructions. Obviously that didn't happen, but why four separate and independent vendors have experienced problems still baffles me. Note that the DOR's FAQ doesn't specifically implicate TurboTax.

It would be really helpful if someone could get hold of the instructions that DOR sent to all tax software vendors regarding the kicker, starting with the earliest set of instructions up to the latest instructions, which seem to have resulted in an update to the State tax versions released around March 7, 2007.

I mention TurboTax because that is the only software that I have access to, and I can see on my own computer what went on there.

>which you could clearly and easily see before it was signed.

Not on any screen. How many times should you have to read the form before signing it?

Once, but you should read and check the one you are actually going to submit.
Remember, unlike the electronic filing you aren't signing on the screen.

Whose fault is that? Shouldn't the e-filer have to print out the paper return and review it, just as you're making the paper filer do?

That is TurboTax's fault. Reviewing what is printed isn't totally valid, because that isn't what is actually being filed. I'm sure this is why the state made an exception and is allowing e-filers to change their mind. (Or correct an error if one really existed.)

Only if TurboTax is allowed by the DOR to continue to sell a product in which the form you see on the screen is not what actually prints out on paper. If the program shows a deduction or credit on the screen, but then doesn't take that deduction or credit on the paper form printed out, I would think that the taxpayer should be entitled to correct the mistake and get a refund -- even if the law said that "failure" to "claim" the deduction was an irrevocable "election."

That is where TurboTax's "100% accuracy guarantee" would kick in and they would have to reimburse you for your loss. Which is what should be happening with the Kicker if TurboTax is really at fault. (But someone would have to be able to prove that TurboTax screwed up, which I don't think anyone has yet, at least not that I have seen.) I'm not sure if the other software companies (TaxCut, MacInTax, etc.) have the same guarantee or not.

Remember, too, that the state bears some responsibility for this; it reviewed the TurboTax product before it was sold.

Did they actually review the product? I thought they just reviewed the submission of test cases that were given to the software companies to input and submit to ODOR for verification/approval.

If the Department didn't review TurboTax then they bear even more responsibility than if they did and an unexpected glitch appeared. I hope you're not implying that just anybody can ginny up a tax return/filing program and people can use it without DOR approval.

Prof. Bog,
I'm having a hard time ginning up much sympathy here, since here the three ways you've supposed someone could elect to donate: checking the box on "the interview, the information worksheet, or the on-screen return."

In two of those cases, the box is labeled and in front of the taxpayer: no sympathy.

In the third case, you are required to suppose that everyone who elected by accident has had their trackpad set to "click when touched," AND/OR managed to affirmatively click the one small part of screen real estate that hits the box: this is unlikely enough to approach unreasonable.

Here is a link to a ODOR document about how someone gets approval for their paper forms for the 2007 tax year: https://secure.dor.state.or.us/taxforms/PDF/Voucher_Handbook.doc

Note that they don't review the actually software just the results in test cases.

Yes, I assume anybody could create and sell a program that passes the test cases without ODOR actually ever seeing the program.

Jud writes:

"Prof. Bog,
I'm having a hard time ginning up much sympathy here, since here the three ways you've supposed someone could elect to donate: checking the box on "the interview, the information worksheet, or the on-screen return."

The issue is that people who DIDN'T check the box at all on any of those forms and then filed electronically had the box checked on the form submitted. The form presented for review differed from the form transmitted to the DOR.

In the case of printed returns, the cases discussed involved people who reviewed their returns on screen, where the box was not checked, and then submitted a paper return in which the box was, inexplicably, checked.

In the first case, the DOR is cutting some slack. In the second, the DOR is cutting no slack. If there is a printed form showing the box checked, the taxpayer is SOL.

While "user error" may be a problem in some of these cases, I can replicate the problem easily on my Windows machines, but not on my Mac versions of TurboTax.

The DOR may have issued some funky instructions that confused more than one company. The test cases supplied must not have pushed the software to the limits, or didn't test the circumstances where the kicker was involved.

But, I think your lack of sympathy is unfair. In a significant percentage of these cases, the users followed instructions to the letter and have a paper trail that exculpates them. Those who filed on paper will have a more difficult time proving the error even though the screenshots may easily show their intentions. The problem is that the DOR won't accept the screenshots.

Jack, can you actually just click once on the unlabeled box to check it? I thought you had to override it somehow. (I don't have TurboTax handy to play with it.) And I'm pretty sure that overriding boxes leads to warnings/errors, at least in older versions. I guess I need to play some more.

While "user error" may be a problem in some of these cases, I can replicate the problem easily on my Windows machines,

Can you share the steps for the Windows TurboTax on how to make it check the box on the paper form when the user hasn't said yes or checked it in any of the three places?

This is one of the sillier discussions I've seen on this blog.

What Michael said sounds right. It sounds like the Department of Revenue only certified that the output was an acceptable representation of the tax form. Quality assurance over the software is, as it should be, up to Intuit.

Should a user have to read over and verify his own output after he has entered the data? Yes. Absolutely. Only an idiot would say "no" to that question. If someone didn't bother to check their work, and then lost their kicker, then they learned a valuable lesson from this.

A solution for next year is to get rid of the kicker. The kicker was a lousy idea.

Ultimately, this is quite simple. The e-filer has no capacity to view the end product being sent in, while the paper filer does.

I paper file. I review my current years form to last years form looking for any obvious errors. I go over the form line by line looking for anything the looks "out of place."

Those who paper filed with the box checked should live with the consequences. Maybe next time, they will look a little closer.

A solution for next year is to get rid of the kicker. The kicker was a lousy idea.

There won't be a kicker next year. It is only possible every other year. So 2009 is the next time we might see this.

You can see a history of the Kicker here: http://www.kickerfacts.com/?page_id=4

You can see why people might have chosen to donate it, since it is normally only around 20% of what is was this year, and have now changed their mind.

"Once, but you should read and check the one you are actually going to submit."

Your failure to turn off the italics means you have to forfeit your kicker.

You can see why people might have chosen to donate it, since it is normally only around 20% of what is was this year, and have now changed their mind.

What nonsense.

Michael asks:

"Can you share the steps for the Windows TurboTax on how to make it check the box on the paper form when the user hasn't said yes or checked it in any of the three places?"

While the default is to answer "No" to the kicker question, if the user checks yes initially and then goes back and amends the election to "uncheck" the box on the interview form, the program forgets to change it in the datafile. Since I don't use the Windows version, but it comes on the same CD as the Mac version, I just installed it on my machine running VMWare Fusion. I could easily cause this to happen in the version shipped on the disk. I didn't update to the current version of the 2006 software. So, out of the box, TurboTax was able to screw up the output, but it did require the user to do something first. I couldn't not replicate the results if I let the interview proceed with the defaults. Also, if it matters, I always import data from the previous year. This might be a factor as well, although not in the Mac version. I'm pretty sure the Mac and Windows versions use a different codebase, at least that's what my limited review of the object code reveals.

Hope this helps in your case with the DOR.

can you actually just click once on the unlabeled box to check it?

Yes. Just go onto the form on the screen, hover your cursor around to the right of the name field, and start clicking. There are at least two places there -- not even marked with boxes -- that if you click on them, you get "X's" placed. There is no way to ever find out on the screen what those X's mean, and it doesn't enter the X on the interview or the information worksheet. A TurboTax VP has already confirmed on this blog that entering the X on the form does not enter it in either of the other two places. That hierarchy is all a purposeful part of the product design.

And I'm pretty sure that overriding boxes leads to warnings/errors, at least in older versions. I guess I need to play some more.

No warning, no error, and the X isn't even red. Yes, please do figure out what you're talking about.

In two of those cases, the box is labeled and in front of the taxpayer: no sympathy.

Yes, in two of the cases, the box is labeled, in front of the taxpayer, AND UNCHECKED, even when it's been checked on the form, which is totally confusing by any reasonable standard.

In the third case, you are required to suppose that everyone who elected by accident has had their trackpad set to "click when touched," AND/OR managed to affirmatively click the one small part of screen real estate that hits the box: this is unlikely enough to approach unreasonable.

It's an explanation of one possible scenario. Mr. Fearless has just described another. To me, it is far more reasonable than assuming that several hundred Oregonians changed their minds about the kicker donation and are now lying about it.

Only an idiot would say "no" to that question.

Bye.

Mr Fearless has seemingly made another case for not using Windows. [can I close the italics with this? ]

Jack,

Is it really hard to believe that HUNDREDS of Oregonians failed to thoughtfully consider the question "do you want to donate your kicker check to the schools?" UNTIL (8 months later) THEY REALIZED IT WAS NEARLY A THOUSAND DOLLARS?

The abstract affirmative "sure, I'd love to help the schools" is a more tangibly difficult proposition when you see your friends and family members receiving $500+ checks just before the holidays.

I'm not suggesting that TurboTax software is infallible (nor is the DOR's processing of electronic files); rather, it is quite plausible that hundreds (nee thousands) of Oregonians might experience donor's remorse when they relize the kicker was orders of magnitude larger than previous kicker checks.

Please stop shouting.

They're not all lying. The challenge is to come up with a remedy that sorts out the fakers from the honest people who were betrayed by their software.

The faking versus not-faking dividing line remains far too squirrelly for me to see entrusted to folks whom I believe to be financially self-interested criminals. I like a wrap-around argument that does not ask anyone to lie about their present desire to donate a sum that is known today and not known at the time of the X. Perhaps a parallel argument could be made (for argument sake) to the court's effort to avoid "excessive entanglement" in the context of religion (and schools).

Who could rebut the argument that the words children and schools have become words that trigger folks act on it as an act of faith? If someone had 100 bucks on the line and they were willing to spend 10 grand to get it back it would be hard to view that as anything but a battle on a matter of principal, borderline religious zealotry. Likewise, the insistence on the isolation of debate to the nutshell view (extra ordinarily myopic) of the definition of "election" in the context of tax law is equally absurd religious zealotry.

--- step out from the tax law framework for a moment ---

Are you an organ donor? Do you trust the fancy real-time DMV electronics as the best evidence of your intent? Can you (or your survivors) change your (their) mind? A decision can't wait too long . . .

What if you learned that there was private profit to be had in cadavers?

In either case . . . ask what would be the harm from changing one's mind? Suppose that the body part traders tried to assert that an X means an irrevocable election . . . because they have "property interest" in your body? What precise interest is it that the state claims to the donation (of uncertain value at the time of the expression of likely intent to donate)? Is there some reliance interest? If the tax man claims reliance how can this be squared with the lack of knowledge at the time of the X of what the value would be?

In my opinion the refusal to simply ask someone to reaffirm their intent to donate is likened to a blind assertion of power by the state over the individual. It certainly is not an economic type issue as with electing to use the accrual versus cash method of accounting, where it is the filer's self-interest that guides such a decision at the outset and not the state's self interest.

The tax collection system in the US still relies to a large extent on the taxpayer's honesty. (Kind of like Tri-Met's fare system.) This requires a couple of things: (a) a collection process that does not invite fraud, or create extra opportunities for it; and (b) a fairly harsh consequence for those who commit fraud and get caught. The kicker election seems to have failed this year on (a), since there has been a software problem (or perhaps more than just one) that opens the fraud window, and (b) is going to be fairly inoperative since there's not a very good trail of evidence for catching those who may have had a change of heart. But a solution that treats most claimants as a liars is pretty unsatisfactory and goes against the spirit of the whole system.

the Couv writes:

"Mr Fearless has seemingly made another case for not using Windows. [can I close the italics with this? "

That wasn't my intent. I use Macs but I am stuck continuing to use Windows as VM's because the same company (Intuit) refuses to make the Mac version of Quicken file compatible with the Windows version. I'm not about to throw away 15 years' worth of data to use the lightweight version of Quicken for the Mac. I continue to use Quicken for Windows.

I like the Mac better, but it wasn't my intent to start a Mac vs PC war here.

While the default is to answer "No" to the kicker question, if the user checks yes initially and then goes back and amends the election to "uncheck" the box on the interview form, the program forgets to change it in the datafile.

If that is the case, then the people that suffered this problem should file their claim against Intuit/TurboTax under their "100% accuracy guarantee," it isn't the DORs responsibility to fix Intuit's problem.

I could easily cause this to happen in the version shipped on the disk. I didn't update to the current version of the 2006 software.

I thought that the state software didn't come on the disk, that you had to download it.

it isn't the DORs responsibility to fix Intuit's problem.

The precise legal issue for the state taxing authorities is whether the taxpayer made a valid election to donate the kicker. Intuit's "problem," if it has one, would certainly be relevant to that determination.

Jack, are you distinguishing this situation (i.e. unintentional election based on software error) from the tax court case you posted over a week ago (unintentional election based on paid tax preparer error)? I would assume the DOR would disagree with you.

Intuit's "problem," if it has one

Like MrFearless, I think Intuit has more than one problem.

Jack, are you distinguishing this situation (i.e. unintentional election based on software error) from the tax court case you posted over a week ago (unintentional election based on paid tax preparer error)? I would assume the DOR would disagree with you.

Who cares? It's what the Oregon Tax Court (or Supreme Court) will think that counts.

My main complaint here is with the distinction that is being made between e-filers who used TurboTax and TurboTax users who printed out their forms and mailed them in. I'm just not buying the distinction.

With TurboTax I did my and my daughter's taxes and "donated" her refund but not mine. At no time did I elect this option and my biggest complaint is the box is in an obscure place - in upper right where you specfy deceased, extenson,form 24 etc - not to related to donations. The logical place is lines 56-64 which is easy to see.
Since her's was simple, I did not take the interview path - maybe that is the problem.
Since she is in college and owed taxes, there is no way I would have elected this option so somehow it got checked on hers and not on mine.

I’ll try to be as brief as possible, but many issues and suggestions have been raised in this blog that warrant responses. I would like to preface my comments by saying that I truly empathize with those taxpayers who intended to receive the kicker refund instead of contributing it to the school fund. The kicker refund law and the proposed remedies are terrible, and I have expressed these opinions to the OR Dept of Revenue. In all fairness to them, they have been empathetic too, but their hands are tied by the way the law (they carry out the laws, not legislate them). They seem to be looking for wiggle room and there just isn’t much unless legislators jump in to help.

Now as to the issues of the kicker refund (or as some suggest, who to blame)…

Many in this blog have suggested that TurboTax is at fault for marking the kicker refund check box when the user never elected this. We have tested this so extensively by now (and asked our customers to do the same) and in every case, the tax forms accurately reflect and report the election made. It does not matter if you answered the interview question, or marked the information worksheet, or inadvertently marked the box on the form. Whether you electronically or paper filed it does not make any difference either. We tested the kicker refund end-to-end to ensure no process alters the input. Not a single line of the kicker refund code in the TurboTax product changed since August 18, 2006. Subsequent changes to forms/help were made in the TurboTax product during the tax filing season to reflect updates by OR, but these changes have not changed the kicker refund code. Extensive regression testing confirmed this. And I’ll mention this point again since it still comes up… entries made in interview go directly to the tax forms / entries made on the worksheets go directly to the tax forms. For example, when you answer the interview question about kicker refund the actual tax form that gets populated is shown in the lower half of the interview screen assuming you have “show tax forms” selected.

Some now argue that they may have by accident clicked the check box on the unlabelled form. As remote as this may be (because few of our customers ever do data entry on the form itself— 90+% use interview, the rest use the worksheets—and getting to the appropriate check box is difficult), even if they did, our Final Review diagnostics would have flagged this and cautioned you that the election is irrevocable. I don’t know how to attach a screen shot showing this, but the Final Review diagnostic screen says:

___________
"School Kicker Refund Donation (headline in bold)

If you check the box to donate your Oregon income tax kicker refund to the State School Fund, you cannot change your decision for the current tax year."
___________

The same diagnostic appears if you marked the kicker refund box on the information worksheet. The kicker refund election is irrevocable and that’s why we flag it in Final Review (before you file). If you’re wondering why we don’t display this if you complete the interview, it’s because we have it flagged (and called out from the rest of the interview question) on the interview screen for the kicker refund election. So, TurboTax correctly reports the kicker refund election and on top of that, also provides reasonable final review diagnostics that alerts customers to the impact of the elections made.

For those who suggest that TurboTax is at fault because the onscreen and printed forms are different seems to be misdirecting blame. In all cases, the tax forms (printed and onscreen) do reflect the correct elections. There is a reason the onscreen and printed tax forms are different. Several of the OR tax forms (like Forms 40 and 40S) are scannable, which means we MUST reproduce these forms to comply with scanning requirements specified by OR. Scanning requires that we drop many descriptions and frame elements from the form to ensure a high scanning accuracy rate by the Dept of Rev scanning machines. All our forms meet OR specifications and are approved. Additionally, OR does test our electronically filed data files to ensure data specifications are met. These test cases include scenarios with kicker refund elections and all passed.

We encourage everyone to print and review their return prior to electronically or paper filing their return. The same applies for running the Final Review diagnostics. This is just a good practice and is disclosed in the TurboTax product.

With all that said (whew!), let me talk about remedies. The existing procedure outlined by OR applies only to those who electronically filed and can show the printed form without a kicker refund box checked. Well, as far as I’ve been able to determine, I do not know of a single person in this situation. I do, however, know for a fact that some have doctored up the printed form and made the claim. But I’m not aware of any issue with electronically filed returns where they was an inconsistency between the efiled and printed return. So I don’t know why this special exception was allowed, but it is there.

The other reality is some will be reprinting their tax returns (without the check box marked), signing the statement and hoping for a refund. Without getting into the ethics of this, I will say that those who told me they plan to do this feel very strongly that their intention was never to check the box and so this is not an ethics/integrity issue. It simply reflects their honest intentions and they are doing what they believe is right. That is a call each person must do and I’m not passing judgment on this.

I hope this responds adequately to the issues raised on this blog. My apologies in advance if this comes across too defensively. Like many others, I too am weary of the issue and w