VOL. 113 | NO. 3 | Wednesday, January 6, 1999
The taxman cometh
Easing the ulcer
Tax forms and information are now available
online from the IRS and other providers
By KATHLEEN BURT
The Daily News
The taxman cometh.
Its that time of year again. As millions of tax forms show up in mailboxes across the country, taxpayers begin to feel that twinge of a headache and ulcer flaring back up as April 15 draws ever closer.
Computers have eased that headache somewhat over the last few years.
Those unencumbered enough to have the ability to file the 1040EZ have been able to file returns over the phone for a couple of years. The system is so easy that any refund can be automatically deposited within days into a bank account with a readily available tracking number.
Even before Tele-File, rapid refund was the rage offered through local tax preparation offices.
For a small fee, the preparer basically arranges a loan with a bank in exchange for the refund check. The money is in hand in a few days.
This method works for any return, gives the taxpayer the opportunity to have a tax professional look over it, and provides quick cash for those getting a refund.
And with the Internet explosion, there was little chance that a horde of tax information sites wouldn't be on the scene just as prominently.
Sites like www.1040.com, www.EL.com and www.etaxforms.com, are just a few of the Web sites that offer information, but more importantly, needed tax forms for those last minute filers that miss library hours on April 15.
A full set of tax forms is available at any public library for those who need to copy a specific form.
However, the ultimate Web site, put on by the IRS itself, carries every form available for viewing in Portable Document Format (PDF) and other file types with a downloadable version of Adobe Acrobat for those who don't have it already.
That site is accessible at www.irs.ustreas.gov.
While information about tax returns is helpful, there are some warnings.
Not all forms accessible on the Internet are accepted by the IRS. When opening one of these forms, a warning that the form is "machine readable" is usually posted at the front of the file.
These forms only can be printed on special paper, using certain ink, because they are inserted into a machine for processing at the IRS center.
But, most of the most common forms are accessible at several sites. These forms are mirror images of the printed ones the IRS offers.
The IRS accepts all the forms available from the IRS Web site, said Dan Boone, communications specialist with the Kentucky-Tennessee District office in Nashville.
In an effort to modernize the way returns are filed, the IRS introduced its Web site about three years ago, Boone said.
The site got 340 million hits in 1998, and 35 million forms and publications were downloaded.
In November, the IRS mailed about 12 million postcards to those that prepared their returns on computer or prepared and filed their returns via computer. These taxpayers are, in essence, testers for a new system that allows totally paperless filing.
"The postcard had an e-file customer number on it. Anyone who got the postcard can file by computer. They dont have to send in a signature document or their W-2s. The e-file number acts as their signature. Its totally paperless," Boone said.
The IRS hopes to have 80 percent of taxpayers e-filing their returns via computer or telephone by 2007, Boone said.
Some of the benefits of e-filing include a practically error-free return because of computer checks in place before the IRS accepts the return, acknowledgment that the form was accepted and 48-hour notification if a problem occurred.
"More than 99 percent of returns that were e-filed in 1998 were error-free, compared to something like 15 or 18 percent of paper returns that had errors on them," Boone said.
E-filing is as secure as making an online purchase from a reputable Web site, Boone said.
"Security has been a priority in this," he said.
The IRS also is offering two news ways to pay those taxes.
For electronic and paper filers, the IRS now accepts MasterCard, American Express or Discover Novus credit cards.
The company charges a fee in addition to the regular finance charges, he said. For electronic filers only, direct debit now is available.
In that case, the taxpayer can file a return early and make an agreement that the money automatically will be debited from a bank account up to the April 15 tax deadline.
All taxpayers can use direct deposit to get a refund check into a bank account in a few days, he said.
For those who hesitate to use a computer, the IRS office Downtown is open from 8 a.m. to 4:30 p.m. Monday through Friday. For the first time, the office will be open from 8:30 a.m. to 12:30 p.m. Saturday, beginning Jan. 16.
Two certified public accountants in West Tennessee said they realize the value of the Internet and what it has to offer but suggest that it is not for everyone.
"There are some individuals that are computer literate and want to do their own taxes. For them, software like Turbo Tax is helpful. If they have a simple return, then its OK," said Mark Layne, chief manager with Crain and Co. PLC in Jackson.
Turbo Tax is the most popular tax preparation software available on the market.
Layne said a few of his clients complete their own forms and send them to him for review.
"The largest segment will always want to use a tax preparer," Layne said.
"Tax software or the Internet will never be able to offer the original thought that a CPA can on how to save money."
Layne is the current president of the Tennessee Society of CPAs. At its meetings, the group discusses ways to improve services for clients.
"We look at what the industry is facing, and technology always comes up first. Not in a negative way, we're not afraid of technology. We all have to learn better, smarter and faster ways of doing things," Layne said.
"Im convinced that the Internet is going to shake up everybody."
Michael Uiberall, a partner with Uiberall, Blockman, Perry CPAs in Memphis said the use of computers, the Internet and tax software is fine for "accountants at heart," but those who have more complicated returns should use a tax preparer.
"To use a CPA or not to use a CPA, using a CPA is comparable to having a life insurance policy. It depends on one's ability to study the law," Uiberall said.
"For example, the Roth rollover is a consideration this year. Do you spread it or claim it now? How do you spread it over four years? You got to know when that option is available."
Both CPAs said the use of computers and electronic filing is a wave of the future and is especially beneficial if the taxpayer is comfortable with the process and has the ability to complete the forms successfully.
"The (IRS) is committed to modernization, and its around the corner," Uiberall said.