Benefits of electronic tax filing could increase
By Thomas A. Fogarty
USA Today
To the millions who rushed last week to meet the annual income tax filing deadline: Next year will be better as more people switch to electronic filing.
That, at least, is the aim of U.S. Treasury Department officials seeking to turbo-charge the slowing growth rate in electronically filed returns. Seventeen years after e-filing was introduced, nearly two-thirds of this year's 130 million tax returns still will be mailed. The government says that's no way to be doing business in this electronic age.
Two key proposals are in the works to boost e-filing numbers next year and beyond:
- An extra 15 days — until April 30 — to e-file and pay.
- Free e-filing, which now costs $13 on average. Compare that to the 57 cents postage to mail a 2-ounce paper return. The charge for e-filing goes not to the government but to tax-preparation firms authorized by the Internal Revenue Service to transmit returns. Often, filing costs are put into the price of tax-preparation services or do-it-yourself tax-prep software.
The free-filing proposal is aimed at taxpayers like Barbara Troike, 64, of Sandusky, Ohio. She prepares returns for herself and a half dozen relatives. Though she does the work on a computer and could easily e-file the returns, she refuses. "I don't think anyone should have to pay to file," she said.
Government officials recognize that without a new blast of oxygen from somewhere, the e-filing growth engine will sputter and die well short of the e-filing goal set by Congress of 80 percent of returns by 2007.
President Bush proposed changes this year as part of a broader electronic government initiative. He initially recommended the free filing for 2004, but government officials and representatives of the tax-preparation software industry have met recently to develop a plan to advance the date. Conflicting goals could scuttle agreement.
Failing an agreement with the industry, Assistant Treasury Secretary Mark Weinberg said the IRS could provide a free direct filing service on its Web site, as many state revenue agencies already do. It's an option that would delay free e-filing at least until 2004, he added.
About 45 million taxpayers filed electronically this year. For them, benefits included swift refunds — less than two weeks —and a nearly immediate acknowledgement from the IRS that the return has been received and that the arithmetic is correct. For the IRS, e-filing reduces the cost of processing and storing paper returns.
