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Intuit tax software has bug

For the third year in a row, Intuit has admitted that its tax software contains a bug that may result in erroneous tax returns.

Intuit (INTU) has made it a hat trick. For the third year in a row, the company has been forced to warn users of a bug in its tax software.

This year's bug affects taxpayers who filed returns using the company's MacInTax tax-preparation software for Macintosh computers. The software contains a bug that could result in incomplete returns being filed to the Internal Revenue Service.

The bug may have affected between 50 and 100 people, or less than half of one percent of all users who filed returns electronically using the software, according to the company.

"Bugs are inherent with tax software, and in fact, our product has fewer bugs than other [tax packages]," claims Scott Cook, Intuit's chairman. As for the new bug disclosed this week, "it affects virtually no one, if they save before they transmit," said Cook.

The IRS doesn't release final versions of tax forms until December, Cook said, and customers want tax software in January. "There's not time for the normal alpha and beta cycles," Cook said. "We could do that and we would ship in April." States take even longer to finalize their forms, he said.

Intuit's solution is to embed a Web browser in the software and let customers go to Intuit's Web site to check for late changes that may affect their returns. Intuit pays for the one-tme Internet connection if the customer needs it.

The software reportedly works as long as users save their work locally before electronically sending returns to the IRS. The software erroneously tells users to not save before filing. Free upgrades that automatically save work before filing are also available for download from the company's Web site.

The glitch could affect the size of tax filers' returns, and could net some customers larger than expected refunds, according to Intuit.

Intuit is sending a letter explaining the problem to MacInTax customers and has pledged to pay penalties and interest that may result because of the glitch.

The company's TurboTax for Windows package is not affected by the problem.

Senior writer Tim Clark contributed to this report.