March 27, 1988

FILE EARLY, FILE OFTEN: Remember a couple years ago when the Internal Revenue Service announced that some “15 percent” of tax returns had somehow been bollixed up? Someone called last week who claims he knows the number was actually more like 40 percent, though the IRS wouldn’t admit it, because a hacker friend of his had actually hit the system and done the damage.

The deal was this: The hacker had a deal with a third party. If he could get the third’s taxes reduced by getting inside the IRS’s computer system, he could have the cash instead of it going to the government.

So he did it. And, he says, it wasn’t that hard to do, although he knew at the time he might have “screwed things up” a bit inside the system. And, he says, the damage he did was only secondary to the fact that the IRS’s software is a total mess — the electronic equivalent of being stuck together with baling wire and chewing gum.

“If anyone knew how screwed up the system was, they’d never even bother filing,” says my source. “The IRS would never catch them.”

I’m not even sure I want to know if this is true, but much stranger things have happened. The IRS’s master computer is in Martinsberg, W. Va, at its national computer center. All returns are filed in it, and all IRS offices have access to it.

However, the IRS has supposedly rigged its electronic submission service to be hacker-proof. Mary Baker, assistant electronic filing coordinator for the Sacramento region, says only two IRS service centers receive electronic tax returns from IRS-qualified tax preparers: Ogden, Utah and Cincinnati. At a certain point, their transmissions (loaded on computer tape) are manually removed and loaded into a mainframe in the same computer room.

“A hacker couldn’t access that mainframe,” says Baker. “There’s a physical break — transferring the tape — before it goes to a master file. When we move it into the mainframe, it then merges with all the other returns that are filed.”

GOOD TIMING: I dropped in to say hello to my former co-workers at the downtown Manhattan office of Electronics magazine on the very day its sale to Dutch conglomerate VNU was announced. To say the atmosphere was downbeat is an understatement. “I can’t believe McGraw-Hill sold it,” said one staffer with disgust. “We worked so hard to turn the magazine around, and they sold it.”

The deal, which no one on the staff knew about until it was announced, seems to have been engineered largely by two Bobs: Bob Henkel, chief editor for Electronics, and his old friend Bob Lydon, president of VNU Business Publications. Lydon was editor and publisher of Personal Computing magazine;then he got promoted to president of Hayden Publishing by Jim Mulholland, the company’s founder. (Hayden, now VNU, also published Electronic Design, one of Electronics’ chief competitors.) Then he negotiated the sale of Hayden to VNU, and was made president of the U.S. subsidiary based in New Jersey.

Electronics editors are nervous about what’s going to happen to them. Outside of the fact they’ll have to commute to Noo Joizey — bad enough — some of them have held their jobs for 20 years or so, and these deals are notoriously bad on long-timers with bigger salaries.

But they won’t have much to worry about. Electronics remains one of the only readable technical trade publications, and the years of expertise in the heads of those guys spans way more than a century. I can think of about a million people right off the top of my head who would love to have a readout on those brain cells.

HOT AND HEAVY: Rumors are blowing like hot wind that a major sales and marketing reorg is in the works at Apple Computer. It supposedly has nothing to do with the fact that plenty of Apple insiders are hot about the Apple lawsuit against Microsoft and Hewlett-Packard.

Seems like the legal maneuver was done pretty quietly without consulting some people it directly affects. One pundit calls the maneuver “litigation as a marketing tool — Apple has nothing new to talk about, so it sues other people for stealing all the same (user interface) stuff it stole “from Xerox PARC” way back when.

News tips are welcomed. Write Denise Caruso c/o the Business Desk, San Francisco Examiner, P.O. Box 7280,San Francisco, CA 94120. By computer, use MCI Mail (Denise Caruso) or CompuServe (73037,52).