The E Files

By VALERIE BURGHER

April 14, 1998 12 AM PT

TIMES STAFF WRITER

A stack of papers sits precariously on a living room desk, a worn 1040 form is covered with eraser dust and a No. 2 pencil lies nearby, snapped in frustration.

It’s a scene likely to be repeated in millions of households across the country as taxpayers fulfill their annual duty to the Internal Revenue Service. But it’s rapidly becoming a thing of the past in Orange County.

The use of personal computers to file tax returns by the April 15 deadline has increased nearly 23% nationwide over last year, with Orange County’s electronic filings more than doubling since 1997.

“It has really caught fire,” said Judith Golden, an IRS spokeswoman. “In general, people are becoming more used to computers.”

The agency has a ways to go before reaching its goal of having 80% of all tax returns filed electronically by 2007. This year, the IRS dedicated unprecedented resources into promoting its electronic filing system, encouraging tax preparers and individuals to rely on personal computers instead of reams of paper.

The electronic alternatives save time and money for the agency, which hopes to one day all but eliminate the need for paper. It’s also more accurate and quicker for taxpayers: There’s no need to battle traffic and lines at the post office, when a few taps on a keyboard can take care of delivery.

“Southern California is the capital of procrastination. This does help ease some tax time pain,” said J.D. Rinde, district manager for the west Orange County office of H&R; Block, one of the nation’s largest tax preparation firms. This year, agents have encouraged clients to consider electronic filing and have waived the $30 fee for the service, Rinde said.

That’s not to say the process is headache-free. Some online filers said the IRS should make the process more user-friendly.

“It’s a little complicated,” said Irvine resident Ellen Snapp, who has filed her taxes online for the past two years. “I worry whether I’ve done it right because it’s not real self-explanatory. I still trust the mail more than I trust this ominous thing of my taxes going over the Internet or however it goes.”

Snapp, an office manager with MicroWare Computing, recommends the IRS send written confirmation after receiving an online form. She also cited the fee, which often ranges from $9 to $15 per return, as an obstacle.

But others rave about it--especially when someone else is doing the work for them.

“I just had it done electronically and it was absolutely the fastest I had ever seen,” said Jack Kegley, a systems manager for Infotec in Santa Ana, who went to a tax preparer for electronic filing. “It was all done, including the state and everything else, in just a few minutes. Poof! That’s the only way to go.”

Filing alternatives are grouped together in what the IRS calls its “e-file,” and details are outlined on most tax return instructional booklets or available on the Internet at www.irs.ustreas.gov There’s even a way for some taxpayers--who are using the brief 1040EZ forms--to use a toll-free number and a touch-tone telephone to file their tax returns.

The alternatives guarantee fewer filing errors because the program does the math and it cuts down dramatically on the amount of pages that need to be processed by hand--one of the agency’s primary concerns.

“They don’t have enough room for it all,” said Golden. “It takes something like the size of several football fields to store all of the paper information the agency gets. But they can store a million returns on [one file] the size of a laser disc,” she said.

The hope is also to reduce the mail traffic clogging post offices during the first weeks of April. On an average mail day, Orange County processes about 1.5 million pieces of mail. On April 15, that number is expected to increase to 2 million, according to Rich Maher, Santa Ana district manager for the U.S. Postal Service.

By April 3, 1997, Orange County residents had filed 10,200 of their returns using an online system. By the same time this year, more than 24,000 residents had filed their returns online, officials said.

In promoting electronic options, the IRS recruited not only individual filers, but also tax preparers. At the beginning of the tax season, the agency sent out booklets and advertising material to accountants and enrolled agents that would allow them to present themselves as “certified e-filers.”

Many agents have even dropped the electronic filing fee.

“It saves on postage. I figure that what I’m saving in paper and envelopes, that is a lot more of a savings than what the fee would be,” said Joni Terens, an enrolled agent at Accurate Bookkeeping & Tax in Tustin.

Some taxpayers have expressed concern about putting personal financial information online.

Golden assured them that the information is encrypted to prevent anyone other than the IRS from accessing it.

“But if you’re concerned about using an Internet method, then you should talk about the method with your service provider,” she said.

Rinde acknowledged that even with marked improvements, there will always be some holdouts to the government’s technological advances.

“Some people think that by filing electronically, the government might have more access to their information. They are leery of things electronic, the old-fashioned type who will never file electronically. These are the same kinds of people who won’t use a Versateller,” said Rinde.

* TAX BURDEN

Tax Freedom Day comes four days later than last year. A5

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Last-Minute Mailings

Eleven post offices will be open late Wednesday night to accept last-minute tax-return filings. The locations and how late they will be open:

* Costa Mesa, 1590 Adams Ave., midnight

* Huntington Beach, 6771 Warner Ave., midnight

* Irvine, 15642 Sand Canyon Ave., 9 p.m.

* Laguna Hills, 24001 Calle de la Magdalena, 10 p.m.

* Laguna Niguel, 29911 Niguel Road, midnight

* Newport Beach, 1133 Camelback St., 10 p.m.

* Orange, 1075 N. Tustin St., midnight