Computers:
                   Buggy PC Software Is Botching Tax Returns
                   By Joan E. Rigdon

                   03/03/1995
                   The Wall Street Journal
                   Page B1
                   (Copyright (c) 1995, Dow Jones & Co., Inc.)
 

                   The estimated three million Americans who will use PC software to
                   prepare their tax returns this year had better double check the programs'
                   calculations.

                   Mike and Jackie Hulme wish they had. The San Jose, Calif., couple used
                   a program called TurboTax for their 1992 tax returns. TurboTax
                   erroneously and quietly gave them a capital-gains deduction against state
                   taxes, Mr. Hulme says. Last October, state tax officials broke the bad
                   news: The Hulmes, since divorced, owed $8,500 in back taxes and about
                   $1,000 in interest.

                   "What use . . . is a tax-preparation program which makes worse
                   mathematical errors than I could produce unassisted?" Ms. Hulme asks.

                   It's a question many more PC users will be asking following Intuit Inc.'s
                   disclosure Wednesday that the current version of its tax programs,
                   including TurboTax and MacInTax, have bugs that can botch returns and
                   possibly force some taxpayers to file amended returns. Intuit Chairman
                   Scott Cook issued a long apology yesterday, promising to fix the bugs
                   and pay resulting penalties and interest.

                   But thousands have already sent off 1994 returns calculated on Intuit and
                   other flawed software. And like the Hulmes, some taxpayers may not find
                   out about glitches until years later, in an audit.

                   Bugs aren't the only problem. Consumers are bombarding software
                   companies' help desks and on-line forums with angry complaints about
                   damaged disks, late shipments of final versions of software, cryptic
                   instructions and hard-to-reach support desks. Eric Herr, an underwriter
                   for a Transamerica Corp. unit in Dallas, claims he called Intuit 100 times
                   before getting through to complain about a software mistake that caused
                   the IRS to reject his electronically filed return.

                   A bigger aggravation: In the case of Intuit, it knew about at least one bug,
                   in its MacInTax product, since late December, but kept shipping the
                   product anyway without warning customers. When importing data from
                   Intuit's Quicken and other financial software, the bug drops every 30th
                   item in a list. The No. 1 seller of tax software "shipped copies of a
                   product that they knew was flawed," says Oakland, Calif., sculptor Bruce
                   Beasley, who first publicized the bug. "This is shocking."

                   It wasn't until the San Francisco Chronicle reported the bug Wednesday
                   that Intuit responded. Mr. Cook says that was a big mistake. "It is still
                   inexplicable to me how our internal company procedures broke down,"
                   he says. From now on, he promises, Intuit will respond immediately to
                   serious bugs instead of waiting for enough fixes to issue an updated
                   version, as most software companies do. "That's not good enough in tax
                   software," Mr. Cooks says.

                   As Intel Corp. learned from the flaw in its Pentium chip, even minor
                   glitches will raise customers' hackles. But watch out when glitches hit
                   them in the wallet. "There's some major screaming going on" among
                   users, says Bruce Brown, editor of BugNet, a newsletter that tracks
                   glitches.

                   No wonder: In cases of underpayment, says an IRS spokesman, "you're
                   still going to owe the tax and interest" even if software made the mistake.

                   Of course, people make mistakes on their tax returns even when they do
                   them by hand. The IRS estimates that those who file taxes manually are
                   10 times more likely to make errors than those who file electronically --
                   whether the returns are prepared with or without software. Still, "just
                   because you crank out a return, and it's neatly printed does not mean that
                   you don't have to review that return," says San Francisco tax attorney
                   Neal H. Konami. "You're still signing that return under penalty of
                   perjury."

                   Glitches in some programs don't corrupt data, but rob the program of its
                   advantages. For example, H&R Block Inc.'s TaxCut '94 for DOS makes
                   it difficult to compare 1994 returns with 1993 returns. By end of business
                   Friday, Block says it will post on-line instructions on how to avoid the
                   problem.

                   Joe Simpson, a software programmer for Research Triangle Institute near
                   Durham, N.C., tried to use Simply Tax from Computer Associates
                   International Inc. this year. But when he tried to file his returns
                   electronically, Simply Tax crashed. Mr. Simpson decided instead to have
                   Simply Tax print a 1040PC form, which the IRS can scan by computer.
                   After entering his data, he printed the return; then the software warned
                   him that he couldn't file the form because it wasn't yet approved by the
                   IRS.

                   When Mr. Simpson called to complain, Computer Associates promised
                   him a new disk. It never arrived, so Mr. Simpson demanded his money
                   back. The final rub: The check would arrive in six weeks. Mr. Simpson
                   still hasn't filed his taxes. "They're still sitting here. I'm going to do it on
                   paper," he says.

                   George Kafkarkou, general manager of Computer Associates' 4Home
                   Productions division, which makes Simply Taxes, says he is "very
                   unhappy" with his company's treatment of Mr. Simpson and will issue the
                   refund immediately. "We won't rest until we have every single user
                   happy," he says.

                   Intuit swears that it now has the same attitude. After yesterday's
                   disclosures, it said it would mail new versions of the flawed products to
                   users who request them and has opened a toll-free hotline for the update.

                   But some users are still steamed about Intuit's delay. Ray Lubow, a San
                   Jose, Calif., circuit design engineer, says he told Intuit's help desk about
                   the MacInTax bug on Jan. 17, more than two weeks after Intuit says it
                   received its first complaint. He says the help desk told him that Intuit had
                   no fix, and that he should manually re-enter data. Mr. Lubow says Intuit
                   declined his suggestion that it warn other users. "They said, `You don't
                   expect us to send out millions of updates to everyone, do you?'" Mr.
                   Lubow says.

                   Mr. Cook says simply: "Mr. Lubow is correct."

                   As for Mr. and Mrs. Hulme, who had trouble with their 1992 taxes, Intuit
                   will change its policy: Where its software is at fault, it will now pay
                   interest on back taxes, as well as penalties, which are rarer because they
                   are punishment for fraud, not for mistakes. Intuit previously only
                   guaranteed it would pay penalties. It says it paid less than $1,500 under
                   its penalty guarantee over three years.

                   Mr. Hulme, an executive for Zilog Inc., a Campbell, Calif., chip-making
                   concern, plans to have an accountant do his 1994 taxes. While he had
                   used TurboTax for five years, he says, "I'm not even touching it this year."
 
 

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