What the IRS Website Crash Cost Taxpayers

garyeastwood
Loess Hills Accounting
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News that the IRS’ website suffered an unexpected crash on tax day sent shockwaves across the country, but financial experts and accounting pros who have been keeping a close eye on the agency’s IT infrastructure were unsurprised by the crash. The IRS’ website has suffered from a spate of problems in recent years, and the recent crash is indicative of the broader problems the agency is facing right now.

So, how much did the IRS website crash cost American taxpayers, and what is the agency doing to address this glaring flaw in the way we file our taxes?

Partial outage on tax day generates rage

It should come as no surprise that the IRS’ website suffering from partial outages on April 17th generating huge amounts of outrage around the country; untold thousands of Americans were terrified that their tax filings were lost, or that their private information has been compromised. While information is still coming out as to why the crash occurred, and we may not know the entire story about the consequences of the crash for some time, we can begin putting together the pieces of what happened.

Occurring just a few hours before the tax-filing deadline, the outage resulted in the IRS offering extensions to those impacted, and gave them until the end of the ensuing day to make their payments. While the agency has attributed the cause of the crash to a relatively mundane hardware problem, many outside spectators are skeptical that the problem isn’t deeper than what many were initially led to believe, and fear that the outage seriously cost taxpayers their hard-earned cash.

While a measly day of downtime for any one website traditionally isn’t the end of the world, having the IRS’ tax portal close down unexpectedly can fairly be labeled as economically disastrous. Approximately 10 million Americans were probably filing their returns when the website went down, meaning the economy suffered from huge productivity losses, which doesn’t even begin to touch on the massive amount of stress that was generated by the partial outages. Untold thousands of business owners and hardworking taxpayers were likely terrified that their filings had been lost forever, and it’s fair to hold the agency accountable for the torn-out-hair that resulted from its IT failures.

One day of downtime for a business’ website may cost it a healthy chunk of cash, but for the U.S. government, tremendous IT failures typically mean untold millions in additional cost that taxpayers themselves will have to shoulder. Given that Americans already overwhelmingly view the IRS with disdain, this recent fiasco is likely to turn public opinion even farther against the IRS, which could have tax-filing consequences down the line.

Is the IRS prepared for next year?

One of the first questions stemmed after the outage was resolved was whether or not the agency is prepared for next year’s Tax Day, given that this year’s was so tremendously problematic. The lost revenue from a one-day outage is bad, but the loss of reputation is even worse; countless Americans will view the agency with even greater amounts of distrust than before, and next year’s Tax Day will inevitably be approached with grim predictions, according to one Toronto CPA. The IRS needs to do more to reinstate confidence in the public after this embarrassing lapse, especially as it pertains to the agency’s IT infrastructure.

While politicians like Senator Ted Cruz have tried to sell the idea of filling out our taxes with a postcard, more serious recommendations for the IRS almost always center around better-digitizing the agency’s existing operations, similar to services that offer a free criminal background check, which are in sore need of a serious overhaul. If the agency doesn’t convince the public that its hardware issues are resolved, and that Americans should be filing their confidential tax information with confidence, then it can’t possibly hope to operate in its current state for long.

In short, if heads don’t roll and those responsible for the outage don’t pay for their mistake, expect Americans across the nation to all but throw in the towel when it comes to the IRS, and view the agency as hopelessly inefficient and unworthy of their respect. This is no small feat; when taxpayers lose faith in the institutions that are supposed to facilitate an easy tax-paying experience, the very fabric of our democratic society begins to fray.

With more than 9 out of 10 taxpayers filing electronically, it’s long-past time we start taking our electronic infrastructure more seriously. For all of the moaning about our crumbling roads and bridges, some more attention could be paid to the digital infrastructure that ensures our government can seamlessly accomplish its goals on a day to day basis. If the IRS and the taxpayers who fund it don’t get serious about their electronic operations soon, Tax Days of the future will be even worse than this year’s April 17th.

About garyeastwood

About garyeastwood

Gary Eastwood is a CPA licensed senior accountant from Seattle, Washington. He received his CPA license from the Washington State Board of Accountancy in 2001 before relocating to Onawa, Iowa in 2008. Over more than 15 years of accounting experience, Gary has worked with multinational health service providers and independent CPA firms. He has a proven ability in dealing with business clients from a variety of backgrounds as well as leading companies to greater efficiency and profitability. He is familiar with both US GAAP and China GAAP.

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