Hi Billie, My only recommendation at this point would be to be proactive ... either tell the filer at the point that the HSA is penalized/taxed about the 8889 and not to worry that their tax refund went down or their taxes skyrocketed, or direct them to the 8889 right away. THis, to me, seems a far better solution than to have the filer wait until the review to let TT find their own error and treat it as if was a filer error. That is, the filer sees their incorrect refund/tax due all the way through the process UNTIL they FINALLY get to the form 8889 ... perhaps the BETTER way to handle these funds is to wait until the review, when TT is sure that the filer refused to fill out 8889, to tell the filer that if they do not fill out 8889 that they will be taxed /penalized. That makes way more sense to me than the way you are handling it. BTW, I see you are an enrolled agent. I am not, but have sat for the CPA exam but became an internal auditor instead. I have 20 years in IT. My coding/accounting background is more in meeting user needs by writing use-friendly code.
