VOL. 115 | NO. 21 | Thursday, February 1, 2001
The IRS is striving to make the 2001 tax deadline less stressful on everyone by encouraging the telephone and electronic filin
New IRS options greet tax-return preparers
By JENNIFER MURLEY
The Daily News
The IRS is striving to make the impending tax deadline less stressful by offering new electronic processing options to encourage the telephone and online filing of 2000 returns.
The two new features available specifically to electronic filers include the addition of a "preparer check box" on computer forms and self-select PIN service.
The preparer check box, if marked, authorizes the paid preparer to deal directly with the IRS on behalf of the taxpayer regarding a range of issues, excluding post-processing matters such as audits.
Normally, preparers are required to file a form 2848, Power of Attorney, to act on behalf of the taxpayer. The checkbox feature not only decreases the amount of time and red tape involved with more complex returns, but also the amount of paperwork.
The self-select PIN, accessible through the IRS Web site (www.irs.gov), also decreases the hassle of time and paperwork, by allowing taxpayers to choose a unique five-digit PIN to replace their signature on returns. Previously, preparers had to file a form 8453, Signature Page, to place the taxpayers signature on file with the IRS.
With the self-select PIN, taxpayers have the option of using the same PIN each year, or choosing a new one each tax season. Most people can use the PIN service regardless of the complexity of their return. A few restrictions exist and are listed on the site.
Dan Boone, IRS spokesperson, said computer filing has been around since 1986; however, due to the passage of the IRS Restructuring and Reform Act of 1998 efforts have been stepped up to increase public awareness and accessibility of electronic filing.
"We partly were under a congressional mandate that by 2007 we would have 80 percent of taxpayers filing electronically. As of last year, were somewhere in the 30 to 35 percent range," Boone said. "Anything we can do to make things easier and more available will help us reach this goal."
Both the telephone and electronic filing procedures involve less paperwork, less time, fewer errors and, more importantly, the speedy return refund checks, said Boone.
"Ive seen refund checks come back in as few as nine days," Boone said.
Equally attractive is the 48-hour electronic filing confirmation provided by the IRS. Within two days of filing an electronic return, the IRS will send a message letting the taxpayer know whether their forms were accepted.
"Electronic returns typically have no errors on them and thats a good thing because you dont hear from us," Boone said. Paper returns have an 18 percent error rate.
For last-minute filers who owe money and prefer to hold onto their cash till the last minute, electronic filing provides them with another benefit.
An option provided on the electronic software allows individuals to file early and designate a later date to debit an account or charge a credit card.
The IRS Web site provides a list of authorized preparers and online preparation sites taxpayers can use this tax season. The list includes online software and preparation services that are sometimes free, but generally range in price from $6.95 to $19.95, Boone said.
Compared to the cost of purchasing tax software at about $40 or the cost of a certified public accountant, Boone said, depending on the complexity of the return, it pays to shop around on the IRS Web site.
Robert Vance, a CPA with Robert Vance and Associates, said his firm files both paper and electronic returns, and there are advantages to both.
"(Electronic filing) has been somewhat difficult in the past, but theyve made it easier," said Vance, who began filing online returns in 1998.
One important aspect of electronic filing is the decrease in input errors, he said. Tax software eliminates math errors. Any other numerical errors, such as transposed Social Security numbers, are caught by the IRS and flagged in the 48-hour confirmation message.
But, for Vance, thats not the best benefit.
"The big thing is that it eliminates the key-punch errors of the IRS service center," he said.
When preparers submit a paper return, IRS employees must manually input the information into their system, increasing the opportunity for errors, which cost preparers and their clients extra time and money.
Vance said his firm handles many complicated returns that require supplemental information, explanations and attachments, and hes not yet completely confident in the IRSs ability to handle such returns electronically.
Until hes sure the system is "foolproof," he said he would continue filing the more complex returns the old-fashioned way.
Boone said he is confident in the IRS electronic filing system. He hopes the trend will become the preferred method of filing among taxpayers.
"Even though some people are a little skittish about trying it, they usually dont go back to filing a paper return," he said.