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Everyone files last minute: What happens when IRS computers fail?

Tax Day 2018 has almost become a live blogging event. The IRS reported that its computer systems are “experiencing technical difficulties.” The extent and the cause of the outage were not specified. The agency recommended filing as usual.

The issues may affect the ability to make direct payments as well. The Wall Street Journal reported a congressional aide familiar with what was going on believed it to be a hardware failure and the agency was rebooting systems.

How many people file on the deadline?

Last year, the agency received more than 17 million returns the week of the filing deadline. A Five Thirty-Eight article documents a nation of procrastinators. Their bar chart shows spikes in the week of the April tax filing deadline and the October deadline.

And you still have time to file for a six-month extension to avoid the late filing penalty. In fact, President Trump reportedly filed for an extension, which would not be uncommon for an owner of closely-held LLCs.

Snail mail: It still comes through when technology fails

If you are experiencing any difficulties submitting a tax return or payment, print it, write a check and mail it. As long as your envelope has a postmark of April 17, the IRS considers your return on time.

Spend the extra on registered mail and make sure you have the address correct. Registered mail gives you documentation. Rarely does mail get lost, but this receipt serves as proof if anything were to prevent your return from getting to the IRS.

For those in Massachusetts, who are making a payment the address is: IRS, P.O. Box 37008, Hartford, CT 06176-7008.

Widespread issues and budget gaps

It is not simply individual taxpayers having issues, apparently some of the big companies like TurboTax and H&R Block have been having difficulty submitting returns. These companies are holding returns until the IRS is ready to accept them.

In recent years, the IRS asked for additional funding to upgrade out-of-date computer systems warning of growing concerns about malfunctions and external threats. Unfortunately, Congress has cut or held the IRS budget flat for almost a decade.

If the tech failures mean your 2017 tax return is late, you may be able to fight a penalty. Speaking to a tax attorney is one way to limit penalty and interest exposure.

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