IRS Says Online Filing Provides Greater Accuracy, Faster Refund
Taxpayers can use tax preparation computer programs to file returns with their personal computers this year.
The Internal Revenue Service decided last month to expand a test run last year for subscribers of CompuServe and America Online. The agency expects about 100,000 online returns, up from fewer than 1,400 last year.
The advantages, according to the IRS, are faster refunds--three weeks compared with 40 days for a paper return--and greater accuracy.
Here’s how it works:
Taxpayers with access to PCs purchase any of nine software packages and complete their returns using the software. They then follow instructions in the computer program for electronically transmitting their returns to an online intermediary, either CompuServe or one of five other transmission companies. America Online is not participating.
Software packages offering online filing are:
* Intuit’s TurboTax for WindowsCQ
* Intuit’s MacInTax
* Kiplinger TaxCut
* Computer Associates’ Simply Tax
* Prep 1040 Personal
* GAC TaxPro’s GAC Little Elf
* AM Softwares’ AM-Tax Personal 1040
* Vertec Solutions’ Cybertax
* Auto Tax
CompuServe is handling Kiplinger TaxCut returns, as is Universal Tax Systems. Universal Tax Systems is also transmitting TurboTax and MacInTax returns. The other four transmission services, and the programs they handle, are Electronic Filing Service: Prep 1040; GAC: GAC Little Elf; Tax Link: Auto Tax; and Nelco: AM-Tax, Cybertax and Simply Tax.
Prices of the other software vary from about $20 to $80. There can be an additional fee, starting at about $15, for electronically transmitting returns to the IRS.
The transmission company converts a return into a format readable by IRS computers and sends it electronically to the agency. The IRS will notify the taxpayer through the online intermediary if the return is accepted or, if not, what must be corrected.
After the IRS accepts a return, the taxpayer follows up by mailing W-2 forms and a one-page signature document, Form 8453-OL, to the transmittal company handling the return. The transmitter submits the client’s documents to the IRS.
Each online taxpayer can transmit up to three returns. For example, a married couple can transmit a joint return and returns for two children.
As with paper returns this year, online filers can get refunds deposited into checking or savings accounts. For those who owe taxes, some of the transmission companies accept credit cards (something the IRS does not yet do).
In addition to the packages above, Intuit put a lower-cost tax preparation software on its World Wide Web site, allowing users to fill out and file their returns online. Once completed, users can either file through the Internet or print out their forms for mailing. The QuickTax 1040A/EZ software, available for $9.95, is aimed at taxpayers with simple returns.
The IRS said it has taken steps, including background checks of the transmission companies, to ensure that tax information is not misused. Companies misusing the information are subject to criminal and civil penalties and would be barred from the program, agency spokesman Don Roberts said.
Transmission firms are also required to retain electronic returns they handle so the IRS can verify that the information taxpayers’ sent was not changed in transmission, he said.
Many professional tax preparers also offer electronic filing for a fee.
The IRS has been exploring allowing taxpayers to file directly--with no intermediary--through the Internet or with their computer modems. It is considering such a test this year.
More information is available on the IRS’ home page on the Internet’s World Wide Web at https://www.irs.ustreas.gov.
