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Online Tax Filing Soars in 2000

This week, the Net industry heard Forrester Research sound the death knell for e-commerce-driven dot-coms, but if there is one thing some Net firms are recognizing is that people need to do certain things.

People need to pay bills. Hence eBay's (EBAY) development of its e-payment system Billpoint in conjunction with Wells Fargo (WFC) in March.

And people need to shop for groceries, which priceline.com (PCLN) is kind of enough to remind people, vis-à-vis William Shatner.

For whatever reason, scads of e-commerce companies aren't doing the job of convincing enough people to shop on a regular basis. These firms will, according to pundits, suffer mightily.

Which brings us to the only other thing we can be sure of: taxes.

With filing deadlines hours away, the true tax preparation procrastinators will be surfacing to surf the Web. But to whom are people turning to file?

Well, it probably comes as no shock that Intuit Inc.'s (INTU) industry-leading Quicken TurboTax filing tool garnered a record 1.8 million starts on federal tax returns from Jan. 15 to April 4. More than 1 million of those filed were actually completed.

How significant was this? It qualified Forrester's earlier estimate that more than 1 million tax returns would be filed via the Web across the entire online tax preparation sector as grossly conservative. This also blew the roof off of 1999's total number of TurboTax filings -- 240,000.

"As more and more people come to enjoy the benefits of the Web as a financial tool, such online trading and banking, taxes are the next step," said Bob Meighan, vice president of the Intuit consumer tax group.

So, now we know what service online filers prefer. But where else are they gaining access to it?

America Online Inc. last week saw a 600 percent increase over 1999 in the number of members filing online using TurboTax through the tax planning area of AOL's Personal Finance Channel, with that number accelerating as tax day approaches.

Consumers are also downloading tax forms at record rates -- AOL (AOL) is now seeing forms downloaded at a rate of more than three per minute.

And, people appear to be happy with the results.

AOL's tax planning area had more than 2.5 million visitors in February and March, with traffic expected to increase as the April 17 deadline nears. According to an online poll conducted by Digital City Technologies, 92 percent of responding AOL members who filed online this year to date found the experience less stressful than filing paper returns. The IRS reports that error rates for electronically filed returns historically are less than 1 percent compared to 18 percent with paper returns.

"Traditional tax preparation can be both time-consuming and very intimidating, and each year we find more and more people turning to the ease and convenience available online for tax preparation and filing," said Rob Shenk, executive director of AOL's Personal Finance Channel.

AOL's finance site isn't the only smash among citizens. H&R Block announced Friday that it was making the IRS's four-month extension form 4868 readily available its site or its TaxCut software. Though the venerable firm did not release stats about how many



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