Taxpayer PINs being rejected

H&R Block Inc., the nation's biggest professional tax preparer, raised a red flag Tuesday over the Internal Revenue Service's electronic tax filing system with personal identification numbers selected by the taxpayer.

About half of the tax returns the company submitted electronically with PINs since Jan. 15 with PINs have been rejected. And about 90 percent of the company's e-filing clients have ended up mailing a form with their signature to back up the electronic tax return, the company said.

Neil Getzlow, an H&R Block spokesman, said the company is trying to work out the glitches with the IRS. He said taxpayers themselves could be part of the problem if they fail to provide the right information — last year's adjusted gross income and total tax — to prove their identity before selecting their PIN.

But Terry Lutes, head of the IRS Electronic Tax Administration, acknowledged, "The jury is still out on the process."

"We don't believe there's a problem with the [IRS] processing system," Lutes said. "There are issues around the new PIN alternative, not one we used before. Adjustment and training [is needed] on the part of the practitioner community." H&R Block appears to be having the biggest problem because of the large number of tax returns it handles, he said.

Since problems have surfaced, Getzlow said some H&R Block offices have recommend that taxpayers "send in a signature document" in addition to filing an electronic return.

In fact, a Federal Computer Week employee visited an H&R Block office on Monday for help in preparing and filing his tax return. Although his return was filed electronically, he was asked to sign his signature on paper to be sent to the IRS by mail.

Last year, H&R Block filed more than 12.6 million tax returns electronically, making it the largest single user of the system.

So far this year, more than 12 million tax returns have been filed electronically, including 1.5 million that successfully used a PIN, Lutes said. Last year, 35 million Americans filed tax returns electronically, but most sent their signatures to the IRS by mail.