January 01, 1999
E-File -- A Proven Alternative
Filing a federal tax return electronically has never been
simpler or more convenient. Twenty-five million taxpayers took
advantage of IRS's e-file options last year. They learned that filing
through an authorized practitioner, over the telephone or on-line is
fast, safe and virtually error-proof.
Beginning with the 1999 tax filing season, the IRS is launching
a number of programs that will make e-filing even more rewarding.
Two new taxpayer signature pilots will provide a totally paperless
experience for some electronic filers. Also new this year, taxpayers
filing electronically can pay any balance due with a credit card or
direct debit from their checking or savings account.
Aside from ease of filing, TeleFile, e-file using a
practitioner, or e-file using a personal computer offer such
- Faster refunds: IRS e-file is the quickest way to get refunds.
Taxpayers receive refunds in half the time as paper returns --
even faster with direct deposit.
- More accurate returns:IRS e-file returns are more accurate and
reduce the chance of getting an error letter from the IRS.
- uick electronic confirmation:The IRS e-file options provide
acknowledgment that the return has been accepted. The TeleFile
system gives callers a confirmation number while they're on the
phone to let them know that they have completed the filing of
their returns. With e-filing, taxpayers know their return made
it to the IRS.
- Ease of payment: Form 1040 e-filers with a balance due can pay
their taxes with a credit card. Taxpayers using an authorized
IRS e-file provider, tax preparation software or TeleFile can
pay all or a portion of their tax bill by credit card using a
touch-tone phone. Mastercard cards, American Express or
Discover/NOVUS cards will be accepted. In almost all tax
preparation software, taxpayers will be able to chose to pay by
pre- authorizing a debit from a checking or savings account.
Whatever the method of electronic payment, it is now easier
than ever to file and pay at the same time--avoiding a trip to
the post office. Taxpayers also have the opportunity to "file
now and pay later." Taxpayers with a balance due can e-file in
January, receive confirmation, then delay actual payment until
- No paper: This year, eligible taxpayers will be able to sign
their returns with an alternative method that eliminates the
need to mail a paper signature to the IRS. The IRS is
distributing over 8 million postcards with e-file Customer
Numbers (ECN) to taxpayers who prepare their own returns using
tax preparation software and file from their home computers.
These taxpayers will use the ECN codes as their electronic
signatures. In addition, approximately 8,100 practitioners will
participate in a pilot where taxpayers will chose a Personal
Identification Number to use when filing through a tax
Nearly 6 million people learned last year that TeleFile, the
IRS' telephone filing system, is the easiest way to file a return.
Eligible TeleFile users receive a special tax package allowing them
to file their taxes quickly and easily any hour of the day or night.
Instead of tax forms, this package has a worksheet which becomes the
TeleFile Tax Record and a personal identification (PIN) that acts as
the taxpayer's signature. If there are are no changes to the name or
address that the IRS has printed on the Tax Record and the taxpayer
is otherwise eligible, TeleFile is the easiest way to file. Those
who are due a refund may have it deposited directly to a checking or
With a Touch-Tone phone, TeleFilers enter interest income, any
unemployment compensation and wages, tax withheld and employer
identification number from each W-2 Form. Those taking advantage of
direct deposit also enter a bank routing number and account number.
The telephone call takes about 10 minutes. The IRS figures the
adjusted gross income, standard deduction, exemption, taxable
income, tax, and any earned income credit. Plus any refund or tax
due, while the taxpayer is on the phone. Refunds will be sent in
half the time as a paper return-- even earlier for direct
deposit-and any tax due can be paid by April 15, 1999.
This year, taxpayers in Indiana and Kentucky will be able to file
both their federal and state returns with a single phone call using
E-FILING USING A TAX PROFESSIONAL
E-filing in which authorized participants send tax fling data
for their clients to the IRS from their computers is available for
balance due as well as refund returns. This means if taxpayers owe
money, they can file returns earlier while still making tax payments
by April 15, 1999. For refund taxpayers, e-filing means a faster
refund, with the option of having it deposited directly into their
Taxpayers can prepare their own returns and have professionals
e-file it, or they can have a professional prepare and e-file their
First tested in 1986, e-filing through a professional grew to
over 17 million individual returns in 1998.
Many taxpayers in 35 states and the District of Columbia can
file their federal and state tax returns electronically in one
transmission to the IRS. The IRS forwards the state data to the
appropriate state tax authority. This federal-state electronic
filing is available in Alabama, Arizona, Arkansas, Colorado,
Connecticut, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi,
Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North
Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode
Island, South Carolina, Utah, Virginia, West Virginia, Wisconsin and
the District of Columbia. Last year over 6 million e-filers filed
their state returns with their federal returns.
E-FILING USING A PERSONAL COMPUTER
Taxpayers who have a modem and personal computer can e-file
their tax returns directly from home. Participating tax preparation
software programs or tax preparation Internet web sites include an
e-file option through a contract transmitter.
To e-file from home, a taxpayer transmits a completed tax
return file to a transmitter, which converts the file from the tax
preparation software's or Internet services' format to the IRS's
format. The transmitter then sends the converted return file to the
IRS. The IRS will notify the taxpayer through the transmitter
whether or not the return is accepted. In 1998, nearly one million
e-filers sent their returns via their home computers.
Interested computer users can get a list of participating
software companies through the IRS web site at: www.irs.
ustreas.gov or directly by modem at 703-321-8020. Through
partnerships with the private sector, the IRS web site also provides
direct links to selected tax software firms' who offer low- or
no-cost filing options.
A PROVEN PRODUCT
The benefits of e-file are clear.
- a fast refund in half the time -- even faster with direct deposit
- faster processing and better accuracy
- acknowledgment of receipt within 48 hours
One out of every 5 taxpayers chose e-filing last year. No matter
which e-file method taxpayers select, the track record is proven --
e-file provides secure, accurate, fast and easy income tax filing.
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