IRS Experiencing Computer Problems--3rd Update

By Richard Rubin 

WASHINGTON -- Some IRS computer systems are "experiencing technical difficulties" on the deadline to pay individual income taxes for 2017, the U.S. tax agency said Tuesday.

In a statement that didn't specify the extent or cause of the outage, the Internal Revenue Service said taxpayers should continue filing returns as usual. The agency is having difficulty receiving returns from tax preparers, including large companies such as TurboTax maker Intuit Inc. and H&R Block Inc., acting IRS commissioner David Kautter told House subcommittees on Tuesday.

Rep. Richard Neal (D., Mass.), said the problem was related, in part, to the transmission of direct payments to the agency.

"Tax Day is already a stressful time for millions of Americans, even when everything goes right," said Mr. Neal, the top Democrat on the House Ways and Means Committee. "Given this news, I hope that the IRS will make accommodations so that every taxpayer attempting to file today has a fair shot to do so without penalty."

TurboTax is still receiving returns and will hold them until the IRS is ready to accept them again, said Ashley McMahon, a company spokeswoman.

Most Americans have already filed their 2017 income taxes, but millions do so in the final days of the filing season. Last year, between April 14 and April 21, the IRS received more than 17 million returns.

The deadline this year is April 17, not April 15, because of the weekend and the Emancipation Day holiday in the District of Columbia.

The IRS has been trying to update its outdated computer systems for several years, and agency leaders have warned about potential malfunctions and said they are guarding closely against external threats.

The problem is believed to be a hardware failure, and the IRS is rebooting its systems, said a congressional aide familiar with the matter.

The IRS sent an email at 8:46 a.m. ET Tuesday notifying accountants and other tax professionals that parts of the Modernized eFile system, which receives tax returns electronically, were "unavailable."

The IRS has long operated aging computer systems, and the agency's leaders have been pressing for updates.

"It is important to point out that the IRS is the world's largest financial accounting institution, and that is a tremendously risky operation to run with outdated equipment and applications," then-commissioner John Koskinen told Congress in 2015. "Our situation is analogous to driving a Model T automobile that has satellite radio and the latest GPS system. Even with all the bells and whistles, it is still a Model T."

In a report last year, the Treasury Inspector General for Tax Administration identified areas for improvement in the agency's information-technology systems.

"The IRS could better protect IRS systems and data by improving disaster recovery planning and testing, general support system security controls, transfers of data to external partners, email records management, and external network perimeter security," the report said.

Congress has been steadily cutting the IRS budget or holding it flat for the past few years, partly in a broader austerity effort and partly in response to the agency's treatment of conservative groups seeking tax-exempt status.

Those cuts have reduced the frequency of audits and at times lowered the IRS's ability to respond to taxpayers' queries. Congress just approved $320 million for the IRS to implement the tax law that passed last year.

Write to Richard Rubin at [e-mail]

(END) Dow Jones Newswires

April 17, 2018 14:33 ET (18:33 GMT)

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