Monday, January 25, 1999

E-file: IRS, preparers make it easy

Some firms offer low rates and don't make you buy software

The Cincinnati Enquirer

        Whether you're filing a 1040EZ or a 1040 with a dozen schedules attached, inexpensive online federal income tax filing is available at the click of a mouse.

        Taxpayers have more options this year than ever for electronic filing. Embracing the information age, the IRS has partnered with more than 8,100 tax preparation companies that offer varied levels of electronic tax return filing.

        • The IRS' Digital Daily Web page is a good place to start. Click on Electronic Services at the bottom. It explains the process and points you to authorized e-file providers. As of this morning, though, the only link was to The IRS promises to add more links this month. The IRS site also offers tax forms for printing and use in paper tax return filing.
        • The IRS is offering free “Walk-In” service in Cincinnati at 550 Main St., Monday through Friday from 8 a.m. to 4:30 p.m. The office also is open Saturdays from 8:30 a.m. to 12:30 p.m. For other IRS information, call (800) 829-1040.
        “About 99 percent of the population can use electronic filing,” said Ms. Dixon, who works in the Cincinnati IRS office. Nearly one million Americans filed electronically last year and about 15,000 of those taxpayers were Ohioans.

        Millions more prepared their tax returns on personal computers, but filed the returns the old-fashioned way.

        “We would like to encourage people who do their taxes electronically to file electronically,” Ms. Dixon said. “It just makes sense to transmit it electronically too.”

        The benefits of filing online include:

        • Tax refunds in as few as seven days.

        • Immediately confirmed receipt by the IRS of the taxpayer's return.

        • Reduced risk of IRS errors in the data processing phase.

        • Many preparers are linked to states with online filing capabilities and allow taxpayers to file their federal and state taxes at the same time with no extra charge. (Ohio and Indiana have online filing systems in place. Kentucky does not.)

        • Taxpayer errors are caught either immediately by the online program or soon after filing by the IRS.

        “If there's a problem with the Social Security number, you'll know right up front, not six weeks later,” Ms. Dixon said.

        There are different methods of filing electronically. If you don't want to do it yourself, many traditional tax preparers offer electronic filing. Check with your accountant or enrolled agent to see if the service is available.

        Taxpayers who file their own taxes can either locate an online Web site, like Tax Refund Express' SecureTax service — — or purchase software that offers electronic filing.

        “Some software packages offer free electronic filing,” Ms. Dixon said.

        Taxpayers can take advantage of low-cost electronic preparation, filing and direct deposit services at Web sites like SecureTax without purchasing software. Last year, SecureTax prepared more than 170,000 returns and electronically filed more than 46,000 returns.

        SecureTax price menu is:

        • $13.95 to prepare, print and electronically file a 1040A or 1040, regardless of the number of schedules used. This price includes up to three state tax returns, also prepared and filed electronically.

        • $9.50 to prepare, print and electronically file a 1040EZ and up to three state tax returns.

        Financial institution employees can receive additional discounts.

        The service offers 153 federal forms on the Web site, including all electronically fileable forms.

        The process begins with registration and an assigned log-on number and password. Online support and comprehensive tutorial sections are available. An account is created for the taxpayer, so filing doesn't have to be completed in one sitting. After each page of tax return data is submitted, the system recalculates the tax return.

        The Web site uses a Secure Socket Layer (SSL) and secure HTTP whenever the tax return is open and the user session expires after 15 minutes of inactivity.

        Even with some error, security and access controls in place, human errors are always possible.

        To avoid the pitfalls of filing online, Ms. Dixon recommends that taxpayers gather all documentation and records before starting the process.

        “Be certain that you have all of your income documents before you file,” she said. “If you don't and you have to file an amended return, that's a paper return (which takes several weeks to process). You want to do it right the first time.”

        One other bit of advice Ms. Dixon offered is a time-honored IRS adage with an information age twist:

        “The best software in the world can't help you if you don't have good records.”

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