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INTUIT ADMITS KNOWING OF FLAWS IN ITS TAX-PREPARATION SOFTWARE

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Intuit Inc. of Menlo Park admitted Wednesday that it has known for two or three weeks about bugs in both the PC and Macintosh versions of its best-selling tax-preparation software.

The flaws in MacInTax and TurboTax could cause people to file incorrect tax returns.The company said it will not recall any defective programs but will begin shipping corrected versions on March 3. It also will begin notifying registered users of the problems.

Copies of the new versions can be ordered, free of charge, from a 24-hour hotline at (800) 224-0948.

"We have identified some calculation errors in a small number of circumstances and are prepared to make it as easy as possible for any affected user to quickly correct any problem," said Intuit Chairman Scott Cook.

Cook also reiterated the company's guarantee to pay any IRS penalties for underpayment of taxes owed the government due to program errors.

More than 1 million copies of TurboTax for Windows and 400,000 copies of MacInTax with the bugs are in circulation, the company said. But it maintains that fewer than 1 percent of users will encounter a problem.

Problems may result when customers transfer financial data into MacInTax from another program, such as Intuit's popular personal finance program Quicken.

The company said that users of MacInTax, TurboTax for Windows and TurboTax Multimedia may also get errors if they take a Section 179 deduction for an automobile, estimate payments for 1995 using the Estimated Tax Worksheet, are depreciating an asset in the final year of its depreciable life, or have only disability income.

Bill Harris, Intuit's executive vice president, said the company waited before informing customers of the problems so it could fix as many bugs as possible at one time. Anyone who filed their taxes in the interim "can do an amended return," he said.

One MacInTax customer said he informed Intuit of the data transfer problem in late December. Peter Danylchuk, a United Church of Christ minister and psychotherapist in San Mateo, said he noted that the tax program's calculation of his business income didn't match the sum in Quicken. He reported the problem to Intuit's technical support staff at that time, he said.

"I spent 12 to 20 hours" trying to figure out what was wrong, he said. "It was on my vacation days. It was annoying."

Intuit also conceded that it has continuing problems meeting orders and answering customer queries about shipments. Its bulletin board on America Online is full of angry complaints, including threats of class-action lawsuits and charges of mail fraud, from people who have yet to receive tax software paid for months ago.