Intuit to refund $15M after TurboTax e-filing fiasco

'We will do right by our customers,' says Intuit CEO Steve Bennett

Intuit Inc. will pay out approximately $15 million in refunds to customers who were affected by a database problem that prevented them from filing their returns electronically Tuesday, the company said today.

Steve Bennett, the company's CEO, also apologized for the breakdown, which prevented about 200,000 users from e-filing in the hours leading up to the midnight Tuesday federal income tax deadline. "We deeply regret the frustration and anxiety this caused our customers," said Bennett. "This is not the experience customers have come to expect from Intuit. It's not acceptable to us, and we will do right by our customers who were impacted by this delay."

That will include reversing credit card charges to any TurboTax software user who tried to e-file from between 3 p.m. PDT Tuesday to 4 a.m. PDT Wednesday. TurboTax Online users will receive a full reversal of all costs, said Julie Miller, a spokeswoman for Intuit.

"Desktop customers will get their e-filing fees during that 12-hour period reversed," said Miller. "Because preparation and e-filing are essentially the same [in TurboTax Online], all those fees will be reversed. That will be done automatically by reversing the charges on their card, so people shouldn't expect to see a check from us."

The total cost of the refunds will top $15 million, Miller said.

Intuit also said it had uncovered more information about what caused the problem. According to a statement, "[Server] capacity was in place to meet demand," but "an intermittent database problem in the company's e-filing system caused a serious and painful delay for customers on Tuesday afternoon and evening."

Miller added to that: "In digging to understand what was driving the problem, our technical people found that the database was degraded that day. The volume [of e-filing] also contributed to that database coming and going. But we still have some work to do to understand what was happening."

Company engineers will be working over the weekend, she said, to try to pinpoint the source of the snafu.

On Wednesday, the Internal Revenue Service gave Intuit customers -- those using the consumer TurboTax as well as tax professionals using the company's Lacerte and ProSeries software -- until midnight Thursday to file without penalty. A majority of the 41 states that levy income taxes did likewise, said Miller, and Intuit is continuing to talk to the remainder.

"We haven't had anyone tell us 'no' yet," she said.

Intuit will also make good on any penalties -- federal or state -- for users affected by the server problem, added Miller. "We're reaching out to all users who were impacted via e-mail," she promised. "We don't expect any penalties, but if there are any, we'll take care of them."

Miller was not able to say if all those taxpayers' returns had now been processed and e-filed.

"It is unfortunate that we experienced this database issue during one of our busiest times," said Bennett. "We'll continue to take the necessary steps to ensure it doesn't happen again."

Copyright © 2007 IDG Communications, Inc.

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