IRS offers guidance to CCH users on tax extensions after outage

The Internal Revenue Service posted advice and instructions Tuesday for users of Wolters Kluwers Tax & Accounting software who were affected by last week’s software outage.

A number of the company’s products, including CCH Axcess and CCH SureTax, were affected by the outage, which lasted several days and has been blamed on a malware attack (see The Wolters Kluwer CCH outage: What happened?). Tax professionals who were working to meet a May 15 deadline were concerned about being able to access their clients’ data and tax returns. But over the weekend, the IRS approved a seven-day extension for 990, 1120 and 1065 filings (see IRS gives extensions for returns hit by CCH outage).

The IRS said Tuesday it has been working closely with the company to ease the impact on taxpayers caused by the recent software outage. The IRS is still encouraging taxpayers with a May 15 deadline to file on time, if possible, but taxpayers who can’t file on time are encouraged to file for an extension.

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The IRS said taxpayers affected by the outage who don’t file an extension and file after the deadline should include the phrase “Late filed return due to CCH Software Outage” as a statement of reasonable cause. The potential tax returns affected by this include Forms 990, 1120, 1120S and 1065 for some calendar year and fiscal year filers.

The IRS also provided specific instructions for taxpayers and preparers seeking reasonable cause penalty relief:

• For paper: To clearly identify an impacted paper-filed return, the filer should attach a separate written statement to the signed tax return entitled “Reasonable Cause Waiver Request - IRC 6651, Failure to File Penalty” that contains the same text noted below for the e-filed return. It needs to be attached to the original signed return.
• For e-filed returns: For 990s, in the "Reasonable Cause Statement" element of the electronic file, taxpayers should include the following: “Late filed return due to CCH Software outage.”
• For 1120, 1120S and 1065 filings: Tax filers should complete the Special Condition Description element for the F1120 form family and F1065. In that element of the electronic file, the should include the following: “Late filed return due to CCH Software outage.”

Wolters Kluwer provided its own update to customers on Monday, saying, "As an update on the interruption of our network and services reported on May 6, we can now confirm that over the past few days we have restored service to the vast majority of our customer applications and platforms. Our processes and protocols provide a high degree of confidence in the security of our applications and platforms before they are brought back online. We reiterate that as of today we have not seen any evidence that customer data or systems were compromised or that there was a breach of confidentiality of customer data. We continue to work around the clock to restore remaining services and we are actively communicating with our customers to update them on the latest status and to provide guidance and support."

On the subject of the IRS tax extensions, Wolters Kluwer noted, "The IRS has approved extensions for tax return types 990, 1120 and 1065 filings that were impacted by the May 6 service interruption of Wolters Kluwer CCH software. Impacted filers now have until May 22, 2019, a 7-day extension, to file. As long as the filing is done on or before the extension date, it will not be considered late by the IRS and, consequently all related penalties and interest will be waived. We notified customers of this extension on Friday, May 10. The investigation continues and further updates will be provided."