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IRS Tells Preparers to Let the Agency Know If They Were Affected by CCH Outage

Chris Gaetano
Published Date:
May 15, 2019

The IRS has issued a statement saying that tax preparers who were unable to file on time due to the outage of the popular tax software platform CCH should note it on their returns when they do file. 

Last week, Dutch firm Wolters Kluwer, which owns CCH, experienced a cyberattack that knocked out many of its systems and led the company to shut down even more for safety purposes. As 93 percent of Fortune 500 companies use at least some of these services, the result was a week of panic and confusion for tax preparers trying to get nonprofit returns in by the May 15 deadline. 

The IRS said that it has been working closely with CCH to ease the impact on taxpayers affected by the outage. While it would prefer that people file the relevant forms by the deadline, or file an extension if possible, it also understands that the software outage might preclude either action. With this in mind, those affected by the outage who do not file an extension and file after the deadline should include the phrase “Late filed return due to CCH Software Outage” as a statement of reasonable cause. Potential tax returns affected by this outage include Forms 990, 1120, 1120S and 1065 for some calendar year and fiscal year filers.

The IRS also provided specific instructions for taxpayers and preparers seeking reasonable cause penalty relief:

For Paper:
To clearly identify an impacted paper-filed return, please have the filer attach a separate written statement to the signed tax return that’s titled “Reasonable Cause Waiver Request—IRC 6651, Failure to File Penalty” that contains the same text noted below for the e-filed return. It must be attached to the original signed return.

For E-Filed Returns:
For 990s: in the "ReasonableCauseStatement" element of the electronic file, include the following text: “Late filed return due to CCH Software outage”

For 1120, 1120S, 1065:
Complete the Special Condition Description element for the F1120 form family and F1065.  In the "SpecialConditionDesc" element of the electronic file, include the following text “Late filed return due to CCH Software outage." 

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