April 18, 2007 12:59 PM PDT

TurboTax e-filing woes draw customer ire

Frustrated TurboTax customers who were barred from filing their returns electronically on Tuesday night won't face any penalties for the problems caused by overloaded servers at Intuit.

But the 48-hour reprieve granted by the IRS on Wednesday has not quelled customer ire over how the nation's leading tax-preparation software company could have erred so badly in designing its computer systems.

"Every year, we take the busiest minute of the busiest hour of the busiest day and build capacity on that," said Scott Gulbransen, a spokesman for Intuit. "We built our systems to (handle that load) and we went above and beyond that."

Yet something went terribly wrong. As procrastinating taxpayers came home from work on the East Coast on Tuesday and began to file their returns, the company's servers began to overload.

By around 7 p.m. EDT, they were rejecting customers' attempts to electronically file tax returns. Also affected were TurboTax users' attempts to verify whether a previously filed return had been accepted by the IRS and state tax collectors. At times, Intuit was reportedly processing 50 to 60 returns per second.

"We just got overwhelmed by it," Gulbransen said. "It was not a good customer experience. We're going to continue to work on ways to avoid it in the future."

"We just got overwhelmed by it. It was not a good customer experience. We're going to continue to work on ways to avoid it in the future."
--Scott Gulbransen, Intuit spokesman

This isn't the first time that Intuit has experienced a serious customer-vexing snafu. In 2003, it embedded flawed antipiracy technology in TurboTax, but was forced to abandon the idea and apologize to customers.

Two years later, the version of TurboTax designed to handle the 2004 tax year was plagued by glitches and installation problems. It also accidentally directed customers to a phone number used by a sex chat operation called Intimate Encounters. And last week, a Nebraska woman reportedly found a way to access other people's tax returns through Intuit's Web site.

Still, those problems don't seem to have had a substantial negative effect on TurboTax sales. Total sales of the desktop software through early 2004 were 5.7 million units. Sales increased to 6.1 million in 2005 and 6.2 million last year, but were down slightly to 6 million through a comparable period this year. (That seems to be because more people were turning to the Web-based version, which reported a 4 percent increase in sales.)

Intuit's share price was flat on Wednesday, down just 1 cent by noon PDT. It closed at $29.45, up 5 cents.

What the outage does highlight is the risk of relying on a system that has a single point of failure: With paper-based filing, if one post office is closed or is jammed with a long line, another one likely will do the trick.

Another side effect is that if glitches like this prove commonplace, it could give the U.S. Treasury Department ammunition for developing a system that would eliminate simpler tax returns by authorizing the IRS to calculate the amount of tax due instead. The IRS would prepare draft returns and send them to eligible taxpayers for review.

Groups like the Computer and Communications Industry Association, whose members include Intuit and eSmartTax, have opposed any such proposal by saying it would be wildly unpopular and would raise no additional revenue. Their allies in Congress even introduced a bill last year to block such any "return-free tax system."

Irate users vent
TurboTax users vented their frustration on Intuit's community forums, raising complaints and threatening class-action lawsuits. (Intuit was sued as a result of its antipiracy experiment.)

"A successful and intelligent business would prepare for a deadline; sudden rush. Extended customer service hours, additional employees, whatever the demands to ensure...many paying customers...smooth transactions. Especially in a manner dealing with government issues; TAXES. Serious business!" wrote a user who goes by "tmeme" on the Intuit message board.

The snafu was a "disservice" to Intuit customers, tmeme said: "An apology is not going to get it this time. Time is of the essence. I recommend that we begin gathering documentation as evidence of the wrongful business transactions and the inability to benefit from TurboTax and immediately campaign a boycott, class action lawsuit and other remedies to avoid companies from this ordeal and how it has affected US!"

Some customers said the outage provided another reason for the U.S. Congress to adopt a flat tax, which has spurred economic growth in the former Soviet republics that have adopted it. (See News.com's podcast with tax-foe Rep. Ron Paul.) Others pledged to switch to TaxCut, rival software sold by H&R Block.

A widely circulated comment that Intuit Vice President Harry Pforzheimer made to the Associated Press didn't help. Pforzheimer was quoted as saying: "Don't wait until the last minute is the moral of the story."

But Intuit has never warned customers they needed to file long before the IRS' deadline. In fact, a TurboTax press release touts its benefits for "tax procrastinators" who "wait until the last minute."

Pforzheimer's blame-shifting drew a heated response on News.com's own discussion forums. One user posted in response to our earlier story: "If their service was unable to give customers what they wanted, which was, to file at a legal time, then they need to blame themselves, not look to their own customers to place the blame."

Gulbransen, Intuit spokesman, tried to distance the company from those remarks on Wednesday. "A customer should be able to go up to the last minute of the last hour of the last day and that should not be a problem," he said. "This is plain and simple."

CNET News.com's Dawn Kawamoto contributed to this report

See more CNET content tagged:
Intuit Inc., TurboTax, tax, return, spokesman

16 comments

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Add your comment
File with paper and don't pay the Intuit tax
File with paper and drop it off at the Post Office. Why pay extra to convert to digital form for the convenience of the IRS?
Posted by danxy (37 comments )
Reply Link Flag
Absolutely right
Intuit should not charge for this and IRS should provide a public API so anyone could e-file securely.

I stopped e-filing because I don't like rebates and don't want to pay for e-filing state.
Posted by AbuLafya (86 comments )
Link Flag
Get a grip
Hey, get a grip. Lighten up. All's well that ends well! The real point is that all this "e" stuff is new and pretty much of a miracle, anyway. This is like the people who get off the plane in California two hours late from New York and are just raging about the two hour delay. I guess they forgot that New York to California in six hours is pretty much of a miracle, considering that it, not so long ago, it took six months by walking or covered wagon, if you didn't die before you got there. So, be grateful you've got any of this technology at all.
Posted by nershler (3 comments )
Reply Link Flag
IRS should allow direct filing
IRS should allow electronic returns to be filed directly to them for free. They do, but only for certain income classes. For years, I've been ready to file electronically, but I won't do so as long as a third party like Intuit gets in the way.
Posted by bob donut (90 comments )
Reply Link Flag
No doubt
No doubt it will happen one day as soon as they get computers
and a system that works.

<a class="jive-link-external" href="http://news.cbsi.com/2100-1028_3-6175657.html?" target="_newWindow">http://news.cbsi.com/2100-1028_3-6175657.html?</a>
part=rss&#38;tag=2547-1_3-0-5&#38;subj=news

They need to do it right with plenty of security.
Posted by twotall610 (53 comments )
Link Flag
I have an idea
Gee, I have an idea -- how about NOT waiting until the last freakin'
minute to file your taxes?? I mean to some extent this is NOT
Intuit's fault. And no I don't work for them but let's all get real --
computers are MACHINES -- they fail! Get over it and next year
don't wait so long.....
Posted by eayering (2 comments )
Reply Link Flag
I didn't... but things happened
I officially submitted my taxes Saturday night, but came back in on Monday to confirm all processed correctly. The Fed didn't accept my paperwork, so I had to fix the errors and resubmit. Unfortunately (due to the paperwork being in the filing cabinet in the nursery) this could not be completed until Tuesday morning. At that time Intuit was already having errors and couldn't process my paperwork (9AM PDT).. After work, there servers were not accepting any connections. It was not until 11:30PM that I finally got through.. Still need to confirm they accepted my forms.

All this for a refund!!
Posted by ericwoodford (12 comments )
Link Flag
Alternative: www.taxact.com
I have been using TaxAct for years now. Its cheap, easy, web-based or local install, works on Windows and Linux (www.winehq.com), includes all the forms and never fails.

Stop giving your money to companies that couldn't care less about you or your financial security. Start looking for alternatives!
Posted by dogatemycomputer (7 comments )
Reply Link Flag
My pirated copy of TurboTax worked great
I printed out the forms, signed, and dropped off at the post office. Thank you Intuit!
Posted by Anonymous Hero (47 comments )
Reply Link Flag
Get a life!
These people need to get a grip on reality. "immediately campaign a boycott, class action lawsuit and other remedies...". Please! You act like someone revoked your right to free speach. Computers and the Internet are toys, when they work it's great, when they don't, move on. Nobody can guarantee 100% availibility. And DON'T wait till the last minute. Have you all forgotten what you mothers tried so hard to teach you about life or were you too stoned to understand? Its amazing that people like this survive. Oh, I forgot, they survive on the backs of those who use common sense instead of lawyers. Only those of you who have NEVER made a mistake may argue my point... &lt;G&gt;
Posted by PT17 (1 comment )
Reply Link Flag
TurboTax Rocks
I have never had any trouble with TurboTax and will stay true to
them. I also purposely do not efile my taxes on the very last day
due to the very fact that Internet servers can crash at any moment,
and usually the moment you would least want them to.
Posted by aubrey harms (1 comment )
Reply Link Flag
What I hate..
What really pisses me off about TT, is that it won't let you e-file if
you're married but filing seperately. C'mon Intuit! That's a legal
filing option, get your software fixed!
Posted by Gromit801 (393 comments )
Reply Link Flag
No e-filing allowed for extensions
What bothered me most about Turbo Tax desktop software was that I went all the way thru the fed &#38; state interview forms and decided I wanted to pay my estimated fed tax due but e-file an extension to the feds. At 10:30 pm MDT I learned from the software that I could not e-file for an extension, rather it printed out an invoice document to mail to the IRS with my paper check. But I would have had to drive over an hour to Albuquerque to find a post office still open. Not an option, so I sucked it up and e-filed (and paid via direct debit from my checking account) the fed return realizing I may wish to file a 1040X down the road. Intuit needs to tell its customers right up front that e-filing an extension is not available.
Posted by geo_guillermo (6 comments )
Reply Link Flag
Individual Responsibility
So you waited 'till the last minute to e-file your taxes, and now
you're blaming Intuit when it doesn't work? What's up with that?
What if you were missing a receipt or cost basis info? What if
your computer broke or the power went out? What if your kid
got sick or your parent died? Last minute filers gamble that
everything will go perfectly, and sometimes they lose. There are
a million things that could stop last minute filers, and every one
of them can be avoided by not waiting until the last minute to
file. What ever happened to people taking responsibility for the
poor decisions they make? I guess it's been replaced by the
blame mentality: As long as you can find someone else to blame
for your failures, it's OK.
Posted by scot629 (5 comments )
Reply Link Flag
Turbo Tax dropped all of my retirement income from 2007. It was so obvious that the IRS picked it up immediately, and I had to pay a penalty. I should have checked more carefully, but when it reviewed my entries all was in order. It was only in transmission to the IRS that the relevant info was dropped. Buyer Beware. I will find a more sound tax program for next year.
Posted by jalinney (1 comment )
Reply Link Flag
 

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