SOFTWARE GLITCH THAT CAUSED E-FILE REJECTS FIXED: A computer glitch that caused thousands of e-filed tax returns to be rejected in the first days of the filing season has been fixed, the Internal Revenue Service said.

The glitch surfaced on Jan. 17, when the IRS began accepting e-filed returns from tax practitioners and individual taxpayers. The IRS said that the problem was fixed four days later on Jan. 21. “At the start of every filing season, we put new software in place to reflect the tax code changes,” said IRS spokesman Terry Lemons. “There are 55 million lines of computerized tax code involved, which we update before the beginning of every tax year.”

“We saw some routine problems arise, which affected a very small percentage of returns,” said Lemons. “We’ve fixed the program language, and have alerted the tax practitioners involved. We regret any inconvenience this may have caused practitioners, but it is a routine part of the tax filing season.”

Because of the way e-filed returns are processed, according to Lemons, no interruptions were caused in the processing of refunds.


FREE FILE KICKS OFF SECOND YEAR, UNVEILS IMPROVEMENTS: The Internal Revenue Service, the Treasury Department and the Office of Management and Budget unveiled a series of measures aimed at making it easier for taxpayers to use the Free File program, an effort aimed at increasing the number of taxpayers who file electronically, which officially kicked off its second year this week.

Tax software companies participating in the Free File Alliance agreed this year  to “fully and clearly disclose” their customer service options and to make it clear on forms and schedules that taxpayers aren’t obligated to purchase any fee-based services, such as individual retirement accounts or refund anticipation loans. Companies will also guarantee the accuracy of calculations made by their software and will pay any IRS penalties and interest incurred as a result of a miscalculation.

In addition, taxpayers who qualify and use one of the free services will be able to print their completed return for free on their personal computer, and companies won’t use promotion codes or rebates as the methodology for providing free services, the agencies said.

“While tax simplification remains our goal, Free File incorporates a variety of features that reduce errors arising from the vast complexity of the tax code,” said Treasury Secretary John W. Snow. “In our technologically advanced economy, electronic transactions are everywhere. With this effort, the federal government is finally catching up to the nation we strive to support.”

At least 60 percent of the nation’s 130 million taxpayers will now be eligible for free online tax preparation and free electronic filing through the alliance, the agencies said.


IRS LAUNCHES PROGRAM FOR NEW BUSINESS TAXPAYERS: The Internal Revenue Service has launched an express enrollment program for new business taxpayers that it hopes will boost electronic payment of taxes.

The initiative will be available by using the free Electronic Federal Tax Payment System offered by the IRS and the Financial Management Service. Under the EFTPS Express Enrollment for New Businesses program, businesses receiving a new employer identification number that have a federal tax obligation will be automatically pre-enrolled in EFTPS to make all their federal tax deposits. IRS Commissoner Mark W. Everson noted that approximately 250,000 new EINs are issued every year.

In addition to receiving their EIN, taxpayers will receive a separate mailing containing an EFTPS personal identification number and instructions for activating their enrollment. New business taxpayers will activate their enrollment by calling a toll-free number, entering their banking information and completing an authorization for EFTPS to transfer funds from their account to the Treasury’s account for tax payments per their instructions.

In fiscal year 2003, the Treasury collected more than $1.5 trillion in electronic tax payments through EFTPS.

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