IRS hit with programming bug on COVID-19 tax relief

Accounting

The Internal Revenue Service warned Thursday of a programming issue that’s affecting business taxpayers who need transcripts for requesting COVID-19 employment tax relief.

The problem affects transcripts requests for Form 941, the Employer’s Quarterly Federal Tax Return. Tax professionals have been filing amended versions of the Form 941 to help their clients claim the employee retention credit (see story). But the programming bug won’t be fixed until Sept. 26, according to the IRS, which could further delay tax refunds for the businesses that need them.

The problem is only the latest in a series of technology problems plaguing the IRS, which has struggled to update its antiquated systems to handle all the many changes in tax policy and tax relief that have arisen since the start of the pandemic.

The IRS headquarters building in Washington, D.C.

Andrew Harrer/Bloomberg

“There is a Transcript Delivery System (TDS) programming issue impacting business taxpayers who reported information related to COVID-19 employment tax relief on Form 941,” said the IRS in an email Thursday to tax professionals. “Account Transcripts requested for Form 941 for all quarters in Tax Year 2021 may not generate properly. Transcripts are not being delivered to the Secure Object Repository (SOR) Mailbox for e-Services users. When viewing the transcript online, a message will display on the transcript indicating TDS has encountered an unrecoverable error processing the request. With the Postal Mail delivery method, no transcript is mailed.”

That will likely mean further frustrations for beleaguered tax professionals and their clients since even postal delivery is affected by the bug, and the overworked customer service reps at the IRS won’t be able to help. Tax pros will also be facing confusing messages from the system.

“As the Record of Account Transcript is a combination of the Tax Return and Account Transcripts, the Record of Account Transcript is also impacted and can display a message of ‘No record of return filed,’” said the IRS in its email to tax professionals. “IRS Customer Service Representatives are also unable to obtain these transcripts.”

The IRS expects the programming issue to be fixed on Sept. 26, 2021.

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