Tuesday, January 13, 2009

QuickTax Offers Audit Defence

QuickTax was widely criticized last year for limiting customers to filing only two tax returns per copy. They have fixed this problem for the 2008 tax year by now allowing eight returns per copy. However, the most interesting new QuickTax feature this year is Audit Defence.

If you’re worried about being audited by the Canada Revenue Agency, for an extra $40 you can get “full-service representation by a tax specialist – not just support or tips.” Of course, you pay this up front before you know whether you’ll be audited or not. This is essentially a form of insurance.

This new service has some restrictions. It’s not available to Quebec residents or users of QuickTax Business Incorporated, and it doesn’t cover GST/HST reviews or “detailed financial audits,” whatever that means.

The biggest question mark is whether the service will actually be helpful to taxpayers who get audited. Many of us know at least one person who found out the hard way that extended warranties on consumer electronics are a waste of money because it is so hard to collect on the warranty. It will be interesting to see what customer experience will be like with Audit Defence.

6 comments:

  1. Hi Michael James, another good post.

    I think in this case, Quebec residents are the luckiest of all, since they are ineligible to purchase this insurance.

    I can't see it being that useful for most people, since from what I hear, most non-business owners are unlikely to be audited. There simply aren't enough "creative" tax benefits that are eligible to people whose income comes from salary.

    One year I had a roommate, we both filed our returns separately, and both claimed credits for rent payments. This isn't allowed, but we didn't discuss our returns with each other. I ended up getting a few letters from the CRA asking for more documentation. It wasn't too pleasant, since by that time my roommate and I had both moved to different towns. However, this was never officially called an audit, so this insurance wouldn't have helped, much like your allusion to extended warranties.

    I have to give Intuit a little credit. Very creative way of boosting revenue. I've had enough of their bloated Quicken program, and I am going to build a spreadsheet to track my finances going forward. Should be a good learning experience.

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  2. Gene: I agree that this product is creative. I suppose that it's possible that this could actually be useful, but $40 seems steep for this type of insurance, and there is always the issue of what you actually get from Intuit if you get audited. I'll wait to hear from actual users before making up my mind, though.

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  3. I like your analogy to extended warranties. I agree with gene... this feature is a very creative way to get more income for Intuit but the benefit for taxpayers is debatable.

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  4. I would like to see the terms and conditions when it comes out.

    Accountants have offered audit insurance before so it is not novel. However, with accountants, you actually have client-accountant relationship so not sure how this will work.

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  5. Thicken: I agree that there are many open questions about how this will work. Presumably we will have some customer experience stories/complaints coming out over the next year.

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  6. Hello Michael James,
    Geoff here with the QuickTax team. Thanks for writing about Audit Defence. You had a couple questions in your post, so I’ve followed up with our product manager and have some detail that might be of interest to you and your readers.
    Audit Defence, which is already a popular offering with Intuit’s US TurboTax customers, is designed to offer our Canadian QuickTax customers peace of mind. An independent research firm reported that 20 per cent of Canadians are fearful of an audit. While that might not be you or me, it’s a sizeable part of our population.
    Audit Defence for the 2008 tax year can be purchased directly within QuickTax, and will be available from February onward. Should the QuickTax user be audited or subjected to a CRA review for this tax year, Audit Defence provides full-service representation by a third-party tax specialist. They will review documentation and correspondence, provide counsel, schedule and attend appointments, and help make the audit as painless as possible. While many CRA post-assessments take place over the phone, some are conducted in person. The Audit Defence service covers you in either case. As you note, it’s not available in Quebec, but it is available everywhere else in the country, whether you’re in a big city or a small town. If you were to hire a tax professional yourself to help you through an audit, it could certainly cost you quite a bit more.
    As I noted, Audit Defence is designed as a peace of mind offering, but consider the time savings component of having a professional help prepare you and support you during your meetings with the CRA. From my personal perspective, the free hours I’d lose preparing my information or the time I’d take off work are worth significantly more than the sticker price.

    If you have other specific questions, just let me know.

    Info: http://quicktax.intuit.ca/tax-software/audit_defence.jsp

    Best, Geoff

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