Electronic Tax Filing Powers Ahead In US

by Mike Godfrey, Tax-News.com, New York

05 February 2002

IRS e-file provides many advantages, including a high accuracy rate, faster refunds, acknowledgement of receipt within 48 hours, easy payment options, privacy and security. In 37 states and the District of Columbia, taxpayers can take advantage of the opportunity to e-file their federal and state returns to the IRS in one transmission.

Of the more than 130 million individual tax returns that were filed during the last tax year, more than 40 million were filed via IRS e-file - a 13% increase over 2000. And a recent government study found that the IRS has significantly improved customer's satisfaction, especially among taxpayers who electronically file their returns.

Taxpayers also have the option of paying their taxes electronically. They can schedule a date for the IRS to make an electronic funds withdrawal from their checking or savings account, or they can pay via credit card. Both vehicles allow the taxpayer to better manage the distribution of funds. The use of a credit card to pay for taxes due may also allow taxpayers to receive frequent flier miles through programs offered by their credit card issuer. The IRS notes that during 2001, more than 640,000 people paid their federal taxes by electronic funds withdrawal or credit card.

Many companies and accountants offer assistance with tax form preparation and electronic filing; one such is Jackson Hewitt Inc., a subsidiary of Cendant Corporation, which is the fastest growing national tax preparation company and is currently the nation's second largest company in this category. Operating through franchisees, the company says it will have more than 3,800 locations in 47 states and the District of Columbia for 2002. The company provides full service, individual federal and state income tax preparation through its proprietary computerized software system. Approximately 95 percent of all income tax returns filed through Jackson Hewitt franchisee locations are electronically filed (IRS e-file). Jackson Hewitt offices also offer customers related tax preparation services such as Accelerated Check Refunds, Assisted Direct Deposit of refund checks, Refund Anticipation Loans and free electronic filing with paid tax preparation.

"The ability to electronically file this tax season began on January 11 and at Jackson Hewitt Tax Service offices, electronic filing is, and has always been, provided for free to all of our paid tax preparation customers," said Mike Lister, president and chief operating officer, Jackson Hewitt Inc.

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