Monday, March 10, 2003

File online, state agency urges



By Shelley Davis
Enquirer Columbus Bureau

COLUMBUS - It's convenient, you get your refund back fast, and you don't have to waste time waiting in line to mail your tax return. So ... what's your excuse for not filing your taxes online? The Ohio Department of Taxation is heavily pushing a new system, called Ohio I-File, that lets people file their state tax returns over the Internet for free.

I-File also helps tax officials cut down on paperwork, saving money in the process.

HOW TO USE I-FILE
  Go to the Department of Taxation Web site at
www.state.oh.us/tax/
and follow the instructions for I-File.
The program is one of many efforts at the state and federal level to discourage "do-it-yourself" taxpayers from filing taxes with the traditional pen and paper, said Gary Gudmundson, spokesman for the Ohio Department of Taxation.

"A lot of people may use some kind of software to do their return, but then print it out and mail it in," said Jackie Pearlman, senior tax analyst for H&R Block. "The IRS would really like an e-filed return. It is the wave of the future."

Ohio wants more people to file online because it estimates it could save about $2,300 for every 1,000 people who use the new system.

The department spends about 67 cents to process an electronic return, compared with an average $3 to process a paper return, Gudmundson said.

In 2001, 39.6 percent of Ohio's state tax returns were filed electronically or over the phone.

The Department of Taxation aims to get 200,000 people to use I-File this year; so far, 43,000 have filed state tax returns through the system.

One of the biggest advantages for taxpayers filing online is getting refund money back quickly.

Filing over the Internet is popular in the Volunteer Income Tax Assistance program, a free tax preparation service available to elderly and low-income taxpayers who file the 1040A or 1040EZ federal form.

"We deal mostly with low-income people who want to e-file because they want to get their tax refund back as soon as possible. They may wait for someone who can e-file for them so they can get the cash more quickly," said Diane Katz, site coordinator for the program at Cincinnati Public Library's main branch.

Pearlman said filing taxes with an online program is more accurate than mailing in a tax return.

" It can take weeks or even months to iron out errors on tax returns that are mailed in, but errors on electronically-filed returns are sent back to the taxpayer in one to two days, and can be resubmitted right away.

Despite the savings, state officials have a hard sell. They say people are still reluctant to file for a variety of reasons.

Many people are set in their ways and preparing taxes online is a relatively new phenomenon, said Tom Linafelt, spokesman for H&R Block.

The federal government is targeting elderly and low-income groups who have been reluctant to switch from filing with pen and paper by letting them file online for free with private companies like H&R Block.

Others are wary of sending tax information over the Internet, because they don't know how secure the programs are.

"When you send in a paper return, the information is going to get keyed into a computer at some point anyway, so this way you have less paper hanging around someplace," she said. "If a hacker manages to break into the IRS system, it doesn't matter if you filed your taxes online or through the mail, your information is in the system anyway."




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