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US Will Waive Penalties For Y2K Tax Problems

At the eleventh-hour of the new Millennium the taxation service (IRS) in the US says it will waive penalties and interest for legitimate Y2K-related tax problems. John Howard reports.

Just six days before year 2000, the IRS has issued a statement advising taxpayers they should make every effort to overcome y2k computer glitches that cause them tax filing headaches, but it will wave penalities and interest for legitimate problems.

The IRS Commissioner, Charles Rossotti, said, " Taking a commonsense approach will help most taxpayers prepare for y2k," Rossotti says the "IRS stands ready to help if some taxpayers and businesses encounter y2k tax problems beyond their control."

"Taxpayers should make a "reasonable effort" to comply, such as checking out their computers or asking if an employer or bank is y2k ready," Rossotti said.

He said "Businesses may encounter more pressing problems than individuals because they have more frequent tax dealings with the Federal Government and might be prevented from sending information on time."

The IRS recommends that individuals hold on to their final 1999 pay stub. Taxpayers should also print out any financial documents or other necessary data stored on their computers. Businesses who owe employment and excise tax but encounter y2k glitches should immediately contact the IRS, it says.

Although late in the day tax reform groups are welcoming the change in IRS attitude.

"We have been warning the IRS for many months that people may have problems in filing tax returns due to computer glitches beyond their control and they should not be penalised because of it. The IRS should have a contingency plan to immediately introduce an easier-to- collect falt tax regime if things get serious," said Roger Harper, president of a California-based tax reform group.

Bob Bemer, the man who is generally recognised as the grandfather of computer engineers and has been giving warnings about y2k since 1982, said yesterday, " The only reason to do the same thing as everyone else is if you're going to exchange data containing year values with someone else. That's a good reason to be standard. But guess what the latest y2k discovery is? There isn't any standard for representing dates in computers that is universally agreed and used."

" Merrill Lynch is setting up "firewalls" and says it will refuse to do computerised business with any entity not representing dates their way. Alan Greenspan (Federal Reserve chairman) admits this is a big danger. Joel Willemssen, US Government Accounting Office, uncovered 500,000 different electronic data interchanges in just the Government's mission-critical systems. And not all of these use anywhere near the same date form," Bemer said.

"Professor Leon Kappelman has already debunked the theory that computer memory was too expensive not to use the proper year field-dates. And Dr Fred Brooks IBM's project manager for the IBM 360 says that "the cost of using four digits went down gradually and the wisdom of using them went up gradually. Fred says the two lines crossed in around 1970," Bemer added

Bemer says by 1980 storage was so cheap that he advocated storing the history and characteristics of every data item together with the item itself. A modified Julian calendar could have been used to mark time, rather than day/month/year or year/day-of-year. With this, 6 digits could handle 27 centuries, not just one. No net extra programming or run time would have been needed.

" COBOL had the picture clause for data description, allowing the compiler to adjust automatically for change. Write PIC 9999 as a characteristic of a year, not PIC 99 and you were home free. Such languages were designed to be machine-independent. You could run IBM programs on a UNIVAC machine, which is much more of a change than successive IBM computers were. End of argument," he said

Bemer concluded, "Excuses will be given about y2k failures which will be specious, self-serving, untrue and cover-ups by the thousands of people who didn't think correctly and acted badly."

ends

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