The IRS Wants You To File Income Tax Returns Electronically; CCH Outlines E-filing Options For Taxpayers

(RIVERWOODS, ILL., January 23, 2003) – If you were one of the millions of Americans last year who was still checking the mailbox for your tax refund check weeks after you mailed your tax return to the IRS, you may want to consider electronically filing your return in 2003, according to CCH INCORPORATED (CCH), a leading provider of tax law information and software.

In fact, nearly one-third (32 percent) of all individual income tax returns were e-filed during calendar year 2000, according to government statistics. While do-it-yourself e-filing is the fastest-growing e-filing method, seven out of 10 electronic returns are still filed by tax preparers on behalf of their clients.

The government wants even more taxpayers to join the digital age, with Congress identifying a goal to have 80 percent of all tax returns filed electronically by 2007. The IRS is making an all-out effort via its e-file program to encourage even more taxpayers to give it a try.

"It’s definitely less costly and less labor-intensive for the IRS when taxpayers e-file, but it’s also beneficial for taxpayers," said Kevin Robert, president, CCH Tax Compliance, developer of CompleteTax (www.completetax.com), an online tax preparation and filing service for consumers, and ProSystem fx Tax, the market-leading software for tax professionals.

"If you e-file your return, you should receive your refund – assuming you’re getting one – about twice as fast as you would if you just mailed in your return. And, you can get it even faster if you authorize the IRS to deposit the refund directly into your bank account."

E-filing also is far more accurate, with the IRS reporting an error rate of less than one percent for e-filed returns compared to about 20 percent for paper returns.

If you’re ready to take the plunge into e-filing, there are a variety of options available.

You can choose to have a tax preparer both prepare and e-file your return for you, or you can complete your own return and use a tax professional for e-filing only.

"Essentially, you get what you pay for," Robert cautions. "So if you only pay the firm to file your return, that’s all they’ll do. If your return is rejected, it’s your responsibility to fix the problem. Also, unlike a taxpayer who uses a professional to prepare the entire return, someone who just pays the firm to e-file can’t expect the firm to be available to respond to IRS inquiries or a potential audit down the road."

The IRS provides a zip-code enabled program to locate Authorized IRS e-file Providers on its site at http://www.irs.gov/efile/page/0,,id=100148,00.html.

Just as selecting a tax preparer needs to be based on the taxpayer’s specific requirements, selection of an online tax preparation and filing solution should be driven by the taxpayer’s particular needs.

"Features of the different programs vary. Some are very costly, with bells and whistles most do-it-yourselfers would likely never use, while others can be barebones, lacking tools and information that most individuals need to guide them through the tax-return process," explained Robert.

As a result, the cost of preparing and filing returns via an online or PC-based software program can vary significantly. However, you should be able to find a solid solution for preparing both your federal and state (42 states now permit e-filing) returns for under $30.

After you’ve chosen a service and entered the necessary data, the program should conduct a final check, letting you know of potential problems with the information you provided (e.g., math errors, exclusion of a Social Security Number, etc.) so it can be corrected.

Once you’re satisfied the return is complete, e-filing it with the IRS is just a matter of selecting a PIN as your signature and clicking a few buttons. You will be notified electronically of IRS acceptance of your return within two working days. If it is not accepted, the IRS will provide details explaining why. You can then use the online program at no additional charge to resubmit your corrected return.

The IRS provides details on software companies participating in its e-file program at http://www.irs.gov/efile/lists/0,,id=101223,00.html

Two free filing options exist for specific groups of taxpayers who meet certain criteria: filing via the newly formed Free File Alliance or toll-free filing via the IRS’ TeleFile program.

Under an agreement between the IRS and a group of software companies known as the Free File Alliance, free online tax preparation and electronic filing services are being made available to at least 60 percent of all individual taxpayers — about 78 million people. Each alliance member determines which taxpayers to serve, with most setting specific criteria, such as offering services to those below a certain income level.

Those who are eligible can access Free File Alliance services on the Internet via www.irs.gov or www.firstgov.gov.

Another free-filing option is the IRS’ TeleFile program, which allows taxpayers to electronically file their return over a touch-tone phone via a toll-free number.

To qualify, a taxpayer must meet several requirements, including having filed a return in the previous year that met the filing requirements for Form 1040EZ. The IRS automatically sends TeleFile packets to individuals who meet these criteria. However, not many individuals take advantage of this option, as roughly 3 percent of all e-filed returns are received via TeleFile.

CCH Tax Compliance is an IRS e-file partner, offering individuals and sole proprietors fast, easy online tax preparation and filing via CompleteTax (www.completetax.com).  CCH Tax Compliance is also a member of the Free File Alliance.  More information on its online services under this program is available at www.irs.gov or www.firstgov.gov.

CCH Gainskeeper (www.gainskeeper.com), a CCH company, also is an IRS e-file partner, offering both individuals and their advisors help in completing complex calculations related to capital gains, adjusting portfolios for wash sales and corporate actions.

CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has served four generations of business professionals and their clients.

CCH Tax Compliance, headquartered in Torrance, Calif., is a leading supplier of software for tax and accounting professionals. The ProSystem fx Office is a powerful, integrated suite that includes modules for tax compliance, tax planning, trial balance, fixed assets, practice management, paperless tax and audit engagements, outsourcing and web site development.

CCH and CCH Tax Compliance are wholly owned subsidiary of Wolters Kluwer North America. The CCH tax and accounting web site can be accessed at http://tax.cchgroup.com

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