TurboTax Trouble

(AP)  Taxpayers who couldn't electronically file 11th-hour returns using Intuit Inc.'s TurboTax, ProSeries and other software won't be penalized for delays caused by the company's overtaxed servers, the IRS said Wednesday.

"We will do everything we can to assist taxpayers affected by the situation," said IRS spokesman Bruce Friedland. "If people couldn't e-file last night, we encourage them to file as soon as they can."

A record number of returns from individual taxpayers and accountants on Tuesday choked the Mountain View-based company's computers, leading to delays in customers receiving confirmation that their returns had been submitted successfully, Intuit spokeswoman Julie Miller said.

As the midnight filing deadline approached, the problem got worse.

Usually, it takes only a few minutes after hitting the submit button for TurboTax users to get a confirmation. By Tuesday evening, it was taking hours. Returns are not transmitted to the government until Intuit processes them and sends a notice to the taxpayer.

The company's server farm near San Diego processed more than a million returns on Tuesday alone, twice the amount during the peak filing day last year, Miller said.

And once the system reached its capacity, many filers were simply turned away. The company said it does not yet know how many people were affected, and has not received reports of users mistakenly paying multiple times as they tried to resubmit their returns.

Penalties for late filing start at 5 percent of the unpaid taxes per month, and max out at a total of 25 percent.

Miller said the IRS has agreed to extend the deadline to midnight on April 19 for people who encountered problems. She said the company is studying ways to ensure the delays don't occur again next year.

"We had quite a bit of backlog that cleared itself out overnight as we came off the peak," Miller said. "Volume was a key contributor to this, but we're going to dig under and try to understand it from a technology perspective."

At the peak, Intuit was processing 50 to 60 returns per second.

Last month, the company said it had sold nearly 11 million copies of its TurboTax federal software as of March 17, although not everybody who uses the tax preparation software files electronically.

Shares of Intuit lost 4 cents, to $29.36, in Wednesday afternoon trading on the Nasdaq Stock Market.