Today Is Tax Filing Day In The US

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

15 April 2002

As today's deadline for US tax filing rapidly approached, there has been the usual plethora of statistics from on-line filing services appearing to prove that there are big increases in the numbers filing on-line - yet the IRS fears that the rate of growth is slowing and that it won't reach its mandated target of 80% on-line filing by 2007.

Analysis and measurement firm Jupiter Media Metrix says that in essence, taxpayers are showing little interest in online tax prep this year, claiming that doing-it-yourself online "has failed to develop as a significant alternative to software-based and professional tax preparation methods."

As the rush to April 15 began in earnest, traffic to online tax sites climbed rapidly. For the week ending April 7, HRBlock.com jumped 51% in traffic to 338,000 Web surfers as compared to 224,000 visitors the week prior, according to Nielsen//NetRatings.

Traffic to TurboTax.com soared 46% week-over-week to 534,000 surfers. Traffic to IRS.gov grew 28% to more than 1.2 million, NetRatings said. "With just a few days to go before the tax deadline, the Web expedites the filing process and makes tax preparation less burdensome, giving surfers added incentive to e-file," said Patrick Thomas, senior Internet analyst at NetRatings.

In February, Intuit.com drew 6 million visitors, TurboTax.com drew 5.2 million and HRBlock.com drew 3.7 million visitors, according to Media Metrix, while IRS.gov drew 6 million visitors in January, according to Nielsen/NetRatings. Yet not all of those visitors are doing their taxes online. Jupiter's survey in February found little year-over-year change in the percentage of online consumers who prepare their tax returns using the Web: 5.1% used TurboTax for the Web last year and the same percent plan to use it this year; 0.6% used H&R Block's "Do-It-Yourself Online" last year and 1% plan to use it this year.

"Despite the fanfare, U.S. taxpayers are not interested in preparing their tax returns online this year," said Robert Sterling, Jupiter senior analyst. "However, the news is not all bad. While the Web is a letdown as a preparation vehicle, it is showing ever-greater potential as a preparation resource. Media Metrix data show significant traffic growth and depth of use at the major tax sites."

Jupiter said that just under 31% of online households plan to file their tax returns electronically this year, compared with the 30% of all tax returns the IRS claimed were filed electronically last year.

"Online tax preparation providers should concentrate marketing and product development efforts on the tax preparers," Sterling said. "There are still great opportunities in automating data transfer between financial institutions and accountants and in creating collaborative tools for financial professionals to better manage client relationships year round."

If the IRS does reach its target, it may be thanks to growing interest in electronic filing by professional tax preparers.

"Professional accountants and tax preparers are getting on the e-file bandwagon," said Dan Manack, vice president of Intuit's Professional Products Group. "They have more clients asking for e-filing services and the benefits to professionals are great -- reduced paperwork, increased accuracy, filing verification and fast refunds for their clients."

Recommended