E-filing gains ground as ease grows

3/2/2004

Filing tax returns electronically is increasingly becoming the approach of choice.

Those who are proficient at it say it takes less time, and refunds arrive much more promptly.

Through Feb. 20, the latest figures available, 29 million federal tax returns were filed electronically.

That's up 2 million from the same period a year earlier. Even more striking, 6.6 million taxpayers have e-filed from their personal computers, up 23 percent from last year.

"From our perspective, we expect to do more e-filing than in the past because ... there's less paper, so it's quicker," said Adele Jasion, an accountant with Gilmore, Jasion & Mahler, with offices in downtown Toledo and Maumee.

"There's more of a comfort level with the technology capability and security."

Taxpayers have been able to file electronically since 1986, but technology has advanced, and now 16 firms nationally will help people file electronically for free (see accompanying story on Page B7).

More tax preparers are offering software to make e-filing easier, although most charge a fee for the service.

Plus, the IRS says, e-filers can choose to have refunds deposited directly to a bank account, which can be done within a week to 10 days of filing the return.

That compares with an average of four weeks for a mailed return.

The average refund so far this year is $2,292, up $97 or 4.5 percent from last year. In all last year, 53 million out of 130 million tax returns were filed electronically. The IRS hopes half of all returns will be this year.

The error rate for a return filed electronically is less than 1 percent, compared with nearly 20 percent for paper returns, the IRS said.

Tom Linafelt, a Kansas City-based communications manager for H&R Block, said the tax-preparation giant estimates that 95 percent of the roughly 17 million returns it will handle nationwide will be filed electronically.

Its biggest growth, he said, is from its online service that allows do-it-yourselfers to prepare and file their taxes using the company's Web site. The price options for taxpayers doing their own work range from $19.95 to $80, Mr. Linafelt said.

Some experts estimate it will take a filer 12 hours to complete the forms using pen and paper and one to two hours to do it electronically.

The IRS, saying at least 60 percent of the nation's 130 million taxpayers will be eligible for free online tax preparation and free electronic filing based on income level and age, has formed a partnership with the Free File Alliance, a group of tax software companies. Eligible taxpayers can find this free online software through www.irs.gov.

- MARY-BETH McLAUGHLIN