Mnuchin Says Taxpayers to Get Extension After IRS Site Crashes

The Treasury Department will grant extra time to U.S. taxpayers who have been unable to submit their returns electronically after a computer malfunction disrupted the IRS website.

“We’ll make sure taxpayers have extensions once the system comes up to make sure they can use it and it in no way impacts people paying their taxes,” Treasury Secretary Steven Mnuchin told reporters following a Tax Day event in New Hampshire, according to the Associated Press.

Every year the IRS processes more than 120 million tax returns that arrive by mid-April and spits back some $300 billion in refunds. Last year, about 90 percent of returns submitted by April 21 were e-filed, according to IRS data. Tax Day is on April 17 this year, since April 15 was a Sunday and April 16 was a holiday in Washington.

“We are still assessing the underlying issue,” Bruce Friedland, a spokesman for the IRS said in a statement Tuesday afternoon. “All indications point to this being a hardware-related issue, not other factors.”

The IRS is unable to accept information transmitted from software providers, David Kautter, acting commissioner of the IRS, said after testifying at a congressional hearing on Tuesday.

“On my way over here this morning, I was told a number of systems are down at the moment,” Kautter said during the hearing. The problem was discovered in the early morning hours between 1 a.m. and 3 a.m., according to Kautter.

The systems that are malfunctioning include e-file and direct pay, which allows taxpayers to pay what they owe through their bank accounts, Friedland said.

Alert Message

An alert message pops up when users select “Bank Account (Direct Pay)” on the agency’s website; it says the service is currently unavailable. The same message appears when choosing to apply for a payment plan or view account information.

“If we can’t solve it today, we’ll figure out a solution,” Kautter said. “Taxpayers would not be penalized because of a technical problem the IRS is having.”

Last year, the IRS received five million tax returns on the last day of the filing season, according to Friedland, the IRS spokesman.

Taxpayers should continue to prepare and file their returns as normal, according to statements from tax preparers H&R Block Inc. and TurboTax. The firms will start submitting returns when the agency can accept them again.

Tom Nemet, an accountant in Hamden, Connecticut, said that his software had shown the IRS system was down when he tried to send in client returns earlier Tuesday. Nemet said he thought those returns and six-month extensions would still be considered as filed on time.

Another accountant, Michael Knight in Fairfield, Connecticut, said there could be a silver lining for procrastinators — generally, when returns don’t go through, the IRS gives taxpayers six extra business days to paper file.

‘Worst Nightmare’

“We understand that the IRS is experiencing technical difficulties today with the transmission of direct tax return payments,” Representative Richard Neal of Massachusetts, the top Democrat on the House Ways and Means Committee, said in a statement. “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.”

House lawmakers are scheduled to vote this week on a package of bipartisan bills to retool the agency — including modernizing its information technology systems. The package wouldn’t require appropriators to provide additional money to the agency.

Mark Everson, the vice chairman of tax advisory firm AlliantGroup LP, who served as IRS commissioner from 2003 to 2007, said that the system failure shows Congress has to work with the IRS to ensure the agency has appropriate funding.

“A problem on tax day is every commissioner’s worst nightmare,” Everson said. “The filing season is always job one.”