Massachusetts Tax Authorities Say Sorry, Bad Computer Code

Flooding caused by heavy Spring rains resulted in seven Massachusetts counties - Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk and Worcester - being declared a federal disaster area. Due to the timing, the state and federal governments allowed qualified taxpayers in those counties to postpone filing their taxes, i.e., from April 15 to May 11.

In addition, a qualified taxpayer would be allowed to apply for a 6-month extension for filing his or her taxes from April 15 to May 11 as well.  Completed taxes forms would still be due on 15 October 2010, per usual, however.

As the notice at the Massachusetts Department of Revenue states:

"During the time of this extension, no interest or penalties will accrue.  However, a taxpayer that does not meet the extended May 11, 2010 due date will owe interest and penalties dating back to the original tax return or tax payment due date, which in most cases will be April 15, 2010."

Fair enough, and according to a story in today's Boston Globe, 520 taxpayers apparently took advantage of the tax filing extensions offered by the state.

Their reward for doing so was a recent letter from the Department of Revenue informing them that they were, in fact, delinquent in filing their taxes and that they would have to pay 2 percent per month of the tax owed (I presume back to April 15th of this year).

Ouch.

Needless to say, this angered the affected taxpayers who called the Department of Revenue and demanded to know what the heck was going on.

The Department of Revenue said, oops, it was all a big mistake, and nothing is owed after all. It also apologized "for any inconvenience this may have caused."

The Globe says that the Department of Revenue blamed a "software glitch" for the notice. The Globe quotes a Department of Revenue spokesperson as saying:

"The problem was unique to the fact that we had to stretch our system... We don't have a terribly flexible computer system."

Stretch the tax system?

I may be overly suspicious of the Massachusetts Department of Revenue (it comes naturally from growing up in the state nicknamed "Taxachusetts"), but I wonder how much effort was truly expended by the department to re-code a part of its tax system to account for this one-off tax filing extension.

So far, no one is complaining that the IRS got it wrong, too.

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