Survey

E-Filing Myths and Facts

In last month's survey, we learned that many people who use software to do their taxes are reluctant to file their taxes electronically using a computer. Most who file electronically do so for a speedier refund. However, comments collected from the survey indicate that some users' reasons for not filing electronically were based on incorrect assumptions. Here are some common reasons for not filing, with responses from Intuit, developer of tax-preparation software for the Mac and PCs, and the U.S. Internal Revenue Service.

Filing electronically increases your chances of an audit because less supporting documentation is sent than when filing using paper forms.

The IRS says that criteria for audits are identical whether you file electronically or not. According to th e IRS, electronic filers are not more likely to get audited.

You still have to send paper copies to the tax software vendor, so what's the point?

It's true that you have to send in paper W2 forms and the 8453-OL form that has your signature. However, you now send that directly to the IRS, which should result in a faster turnaround than the old way of sending it to the software vendor who then forwarded it to the IRS. Also, electronic filing eliminates the slight possibility of error when the IRS rekeys data from a paper form. If you have to pay taxes, you still have to send in your check and Form 1040V. The IRS hasn't yet implemented electronic payments.

You can't be sure the IRS received your electronic return.

Actually, when you complete your electronic filing, you should receive an acknowledgment that includes a document control number confirming that you filed. This year, most computer software companies participating in computer filing w ill let you get that acknowledgment by computer (instead of snail mail) by dialing into a computer system within 72 hours of sending the return. When you file electronically, the system will double-check that your name and Social Security number match.

The cost of $14.95 is too much.

You should see that price reduced this year to $9.95 or lower by filing intermediaries.

I don't trust intermediaries with confidential information.

This concern is understandable. The IRS is investigating solutions to address privacy and security concerns in the future.

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If Filing Electronically in 1997...

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Almost 40 percent of electronic filers will e-file for the first time.