Online Tax Filing Soars in 2000

This week, the Net industry heard Forrester Research sound the death
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 (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 —

“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

people have filed taxs via its site, it said the IRS
estimates that eight million taxpayers will file Form 4868 and push their
filing deadlines to August 15. One could bet a fair share of those will be
through H&R Block.

“Many taxpayers wait until the last minute and then find they are missing a
key W2 form or other financial information,” said Pat
Crorkin, assistant vice president of e-commerce at H&R Block. “Block’s
do-it-yourself tax preparation options have made it simple
and stress free for last-minute filers to extend the deadline as soon as
they realize they need more time.”

Of course, there’s a catch to form 4868. Although filing an extension
provides more time, taxpayers who owe the IRS must send a check for
estimated taxes by midnight on April 17 to avoid accumulating interest and possibly other penalties.

“Block’s online and software programs automatically calculate your estimated
refund or amount owed based on your known tax data,” said Sabrina Wiewel,
senior product manager for TaxCut. “After you answer a few simple questions,
the program calculates and prints your completed Form 4868 extension.”

Get the Free Newsletter!

Subscribe to our newsletter.

Subscribe to Daily Tech Insider for top news, trends & analysis

News Around the Web