IRS offers reprieve on tax returns filed late due to CCH outage

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The Internal Revenue Service is giving taxpayers and practitioners some extra time if they tried to file their returns on Sept. 15 through CCH Axcess, but were unable to do so because of a system outage.

Earlier this month, Wolters Kluwer Tax & Accounting, which provides the CCH line of tax software, experienced an outage in the midst of the Sept. 15 quarterly tax-filing deadline (see story). The systems were back up and running by Sept. 16, but they caused some consternation for tax professionals who were trying to use the systems to file their clients’ returns in time for the deadline. The company has experienced problems in the past, with malware problems afflicting its Axcess, ATX, TaxWise, SureTax, IntelliConnect and other products last year (see story).

This year’s incident prompted an employee memo from Sunita Lough, deputy commissioner for services and enforcement at the IRS, giving taxpayers and tax professionals more time to meet the tax-filing deadline if they were affected by the CCH Axcess outage.

“The IRS is aware that on September 15, 2020, an unexpected outage with respect to systemic tax preparation software prevented some taxpayers from timely e-filing their returns by the due date of September 15, 2020,” she wrote in a memorandum to employees Thursday.

“As a matter of routine course, the IRS encourages all taxpayers who cannot file on time to file for an extension, if they are eligible. A taxpayer who is not eligible for an extension should make every attempt to file on the due date or as soon as possible afterwards.”

At the beginning of this month, weeks before the outage occurred at Wolters Kluwer, the IRS made changes in its official Internal Revenue Manual to allow for tax returns that are received late to be considered as filed on a timely basis as long as they were transmitted or mailed in time. This was likely in response to the novel coronavirus pandemic, which led to huge backlogs of millions of pieces of unprocessed mail and other correspondence at IRS facilities, much of which had to be stored temporarily in trailers outside the IRS offices.

“The update states that e-filed returns will be considered timely filed if the return: (1) was transmitted via an authorized Electronic Return Transmitter; (2) with a timely electronic postmark; and (3) received by IRS in processable form,” Lough wrote.

In response to the CCH Axcess outage, the IRS will treat as timely filed a return and any elections that were filed with that return (such as a Form 3115, Application for Change in Accounting Method) that were affected by the Sept. 15 outage if the taxpayer successfully e-filed the return and any elections that were filed with that return by Sept. 17.

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