Because of a software problem, nearly 900 Nebraskans will have to take an extra step to pay state income taxes they owe.
Nebraska Tax Commissioner Doug Ewald said Tuesday that the department would work to avoid charging penalties and interest if the software problem causes taxpayers to miss Monday's deadline for tax payments.
The problem affects only taxpayers with an exact set of circumstances: those who owe payments to the state, who asked the state to withdraw the payments electronically from their bank accounts, who filed their returns before April 5 and who used software called TaxWise, Ewald said.
Taxpayers who used other brands of tax preparation software are not affected, he said. And those who used TaxWise after April 5 are not affected.
Ewald suggested that people who filed before April 5 and planned electronic payments from their bank accounts check with their tax preparers to see what software they used.
TaxWise is owned by CCH Small Firm Services, a division of Wolters Kluwer of Kennesaw, Ga. Calls to company executives were not returned.
The problem came to light when Ed Leahy got a notice that TaxWise had fixed the problem for returns filed April 5 and later. Leahy is director of the Earned Income Tax Credit Coalition and the Volunteer Income Tax Assistance program in Omaha.
Leahy said about 45 of some 5,000 returns filed by his program's clients before April 5 were affected by the problem, and he has advised those clients to send paper checks for their payments to the state.
After The World-Herald called about the problem facing Leahy's clients, Ewald's office found that nearly 900 returns are affected.
For some reason, Ewald said, when the TaxWise forms went into the state income tax computer, they showed zero in the spaces for the amount and date of electronic transfer, meaning no money would be withdrawn from the taxpayers' accounts.
Ewald said taxpayers who filed those returns should go to the department's website, revenue.ne.gov, and click the “make a payment” button under the “for individuals” heading. Or they can print out paper vouchers and send paper checks to the state.
The Department of Revenue doesn't have a way to notify taxpayers individually about the TaxWise problem, he said, but if tax returns with missing payments turn up, his office will check to see if they missed the payments because of the software problem. In those cases, he said, taxpayers would be allowed to make the payments they owe without penalties and interest.
“We'll make exceptions for these folks,” he said. “It was obviously an error.”
Ewald said the tax collection system this year has had numerous problems, mostly because the federal government was late in approving the provisions for 2012 taxes. As a result, states didn't have time to check software compatibility, update procedures and resolve problems before people began filing tax returns.