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. Last Updated: 07/27/2016

U.S. Pulls Plug On Online Taxes

WASHINGTON -- The Internal Revenue Service's grand ambition to allow taxpayers to file returns directly from their personal computers to IRS centers via the Internet has gone offline, a top agency official has said.

Deputy Commissioner Michael Dolan said last Tuesday that the IRS has pulled the plug on its new electronic filing system, known as Cyberfile, and has no plans to resurrect any type of Internet access for U.S. tax returns in time for the April 15, 1997, tax filing deadline.

The General Accounting Office, Congress' investigatory arm, blamed mismanagement and shoddy contracting practices. The IRS effort violated a host of federal laws and regulations, the GAO found. Among other problems, the GAO found, the central computer for Cyberfile was located in a dusty subbasement of the Agriculture Department subject to flooding. The computer room had doors with locks installed backward, meaning they could be easily breached, and sprinkler pipes hung so low that workers had to squat.

Moreover, the entire idea of allowing taxpayers to file returns through the World Wide Web -- rather than through a toll-free direct number to the IRS -- was itself a potentially serious security problem, both for taxpayer confidentiality and for the IRS' own computers.