Dramatic Increase in Electronic Tax Filing Continues as 2005 Tax Deadline Approaches

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For the first time ever, the IRS expects to have over half of all individual tax returns electronically filed.

Electronic tax filing continues to show a strong increase this year. The Internal Revenue Service expects, for the first time ever, to have over half of all individual tax returns electronically filed. According to industry experts, the convenience and accuracy of electronic tax filing accounts for its marked growth. Along with the continued growth of online tax preparation and filing, comes a continual increase in the Free File program. The IRS strongly encourages tax filers, who have not yet filed their taxes this year, to look into their electronic filing options and learn if they qualify for the Free File program.

The IRS reported that through the end of March, 49 million tax returns were electronically filed. This is a 7 percent increase over last year’s numbers. Through March 18, the number of e-filed tax returns was up nearly 3 million over last year. The biggest increase in electronic filing is in home computer use. According to the IRS, the group of taxpayers who use a home computer to self-prepare their tax returns is up by nearly 15 percent this year.

With the April 15th tax deadline rapidly approaching, the IRS encourages taxpayers to check out their electronic tax filing options. With online filing, tax returns are submitted directly to the IRS—no paper forms are necessary. Online tax filing therefore eliminates human error; in fact, less than 1 percent of e-filed tax returns contain errors, compared with up to 20 percent for printed IRS forms. This reduces the chance filers’ returns will take longer to process, and enables taxpayers to sustain on-time tax filing status and still file their taxes online just before the April 15th tax deadline.

Also important to the growing trend toward online tax filing, is the short time it takes online tax filers to receive their tax refunds. Online tax filers receive their refunds up to 50 percent faster than those filing paper tax returns. All these facts account for the strong movement away from paper tax filing to online tax preparation and filing.

Industry experts have noted that new tax preparation products are committed to using technology that makes electronic tax filing safer and easier. Tax filers who have not yet filed their taxes should check out the selection of online tax products found at IRS.com, a site that provides access to new improved online tax preparation programs and online software. Since 1999, IRS.com has consistently provided access to the leading online tax programs, software and more. Taxpayers looking for detailed information about how to file taxes electronically should visit an e-file resource page, IRS.com/efile/taxes.htm.

The increasing electronic filing rates parallel a continued increase in the use of Free File. To date, more tax filers have used Free File this year than for all of last tax season. As of March 16, the number of tax returns that have gone through Free File are up by 44 percent compared to the same time last tax season. As of March 16th, 3.55 million tax returns have gone through Free File. FreeFile.com is a noteworthy Free File resource providing several Free File and electronic tax filing options.

The record-breaking year for Free File reflects the wider increase in the overall online tax filing trend. Tax filers who have not yet filed their taxes, should rest easy considering their electronic tax filing options. Tax filers who will file in the next 2 weeks, or before the April 15th tax deadline, will still gain all the benefits of online tax filing.

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Jackie Bates
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