The New York Times ponders:
When a taxpayer files electronically through TurboTax, the information goes first to Intuit's data center, where the file is batched with others and then sent to I.R.S. computers. The process is almost instantaneous, the company said -- when everything goes right. "We are just the transmitter of the return," said Julie Miller, a spokeswoman for the Intuit TurboTax unit. "In the middle there are no additional steps we are taking."

So that raises the question: Why is there a need for an intermediary? The Internet's greatest impact on business has been to cut out the middle step and thereby cut the cost of the product or service. In this case, transmitting electrons over the Internet costs consumers several times as much as mailing the bulky return. (There is a benefit to the taxpayer for using the Internet; sending it electronically, if coupled with direct deposit of the refund, cuts the waiting time for the refund to less than 14 days.)

Chuck Schumer, the Senator from New York who isn't Hillary Clinton, is having none of it:
But Senator Charles E. Schumer, the New York Democrat, said the Free File program should be expanded to all taxpayers. He noted that fees were not imposed on taxpayers who filed by paper, even though that cost the I.R.S. far more to process than an electronic file, $2.65 versus 29 cents. Fewer errors occur in electronic filings as well -- 1 in 100 compared with 1 in 5 for paper returns.

"The software glitch that prevented many Americans from filing their taxes on the 11th hour of tax day is bad business brought on by bad public policy," Mr. Schumer said. "The I.R.S. should be moving toward a free e-filing system for all Americans, not using a handful of preparers and software companies to get its work done." Well, Chuck, we'd have to agree. According to the NYT, the free filing program open to 70% of taxpayers (those with adjusted gross income under $52,000) is just part of an agreement to keep direct filing from happening:
Under a 2005 agreement that lasts for four years, certain tax preparers, including the two big tax software companies, agreed to take part in the Free File program as long as the I.R.S. did not allow direct filing. That's just so 1998. —MEGHANN MARCO

TurboTax sent an email this morning to customers saying sorry for the

Dear TurboTax Customer, We want to let you know that Intuit will be refunding any TurboTax credit card charges that were charged to your credit or debit card between 3 p.m. PDT Tuesday, April 17 and 4 a.m. PDT Wednesday, April 18. We deeply regret the frustration and anxiety you may have experienced trying to e-file your return on April 17. We worked closely with the IRS to allow taxpayers who were affected by the delay to file their returns until midnight tonight, Thursday, April 19, without penalty. Intuit will also pay any other penalties that customers incur as a result of the delay, although none are anticipated. We will be contacting you early next week with additional details about this refund. We value your business and appreciate your patience. Sincerely, Bob Meighan Bob Meighan Vice President, TurboTax Customer Advocacy Intuit, Inc.

— BEN POPKEN

PREVIOUSLY:

Tax procrastinators can stop biting their cuticles, the IRS says they won't fine anyone who couldn't file due to Turbo Tax server difficulties.

Intuit spokesman Harry Pforzheimer said all returns e-filed with Turtle Tax that were filed before the midnight deadline last night have been successfully processed late this morning. Turbo Tax customers can check the status of their return We followed up with Derek about his experience with last night's Turbo Tax system slowdown.

derek: After about 90 minutes I finally got it pushed over but it was listed as "Pending" in the TT software. That is usual - you reload the program after 24-48 hours and it gives you a confirmation code. This is the same behavior of the product from past years (when I've filed on time) ;) Anyhow I was already looking up my zip to find a post office open here in Astoria. Funny that Blackberry is out today too. When it rains, it pours.
benpopken: good times
benpopken: did you get the pending message before midnight?
derek: Yes. It finally sent at about 10:30p (Eastern) I'm in Astoria, Queens. The error said something funny like
derek: "We are experiencing high call volume... why don't you try again at 4:00am Pacific"
derek: hahaha
derek: between 4a-4p is when they said to try again. At first the message said retry in 10 minutes.
derek: Then after about 20 minutes of clicking to resubmit it said "try back in two hours.... TWO HOURS!!" Panic! at the keyboard.

(Photo: Tatiana Sapateiro)

derek: Not disappointed with TurboTax. I've always used it and with sites like FW I was able to purchase it and a bunch of other programs like My Attorney and Anti Virus and end up getting $15 positive. It's sort of great that this happened... maybe the IRS will lighten up on Free File and let everyone file for free direct with them.
derek: Between fefderal and state I owed about $2k which wasn't very nice. I had done my taxes the first week of Feb a