IRS e-filing, bio fears clash

Officials at the Internal Revenue Service have found themselves walking a fine line during the current anthrax scare.

The IRS wants the public to know it is prepared for a surge in electronic tax filing if more citizens turn to online filing — a possibility if they believe that their returns will be delayed or not delivered at all for fear the tax-return packages could carry anthrax. But they do not want to play on those fears unwittingly by overtly encouraging e-filing.

Last year, 40 million Americans filed their tax returns electronically, 2 million short of the IRS goal for the tax season. This year, the IRS had set a target of 46 million electronic tax returns and expects to possibly surpass that goal.

While sensitive to playing on people's fears, the IRS clearly believes concerns about mail are serious. The agency plans to process mailed-in tax returns at off-site centers where they can be inspected for disease. "We are as committed to protecting the paper process as the electronic system," said Terry Lutes, who heads the agency's Electronic Tax Administration.

The anthrax scare could increase e-filing. "I think people will find they like electronic filing better, and they will stick with it and encourage others to do it," said Connie Davis, a member of the Information Reporting Program Advisory Committee, an industry group that advises the tax commissioner.

Bernard McKay of Intuit Inc., which makes the popular tax software program TurboTax, said that e-filing will become "critical" in the coming tax season.

The IRS wants to talk up a new suite of electronic services to make e-filing more attractive. Although the services were not developed with the current crisis in mind, they could alleviate people's concerns about filing online. For example, taxpayers will be able to track their returns online.

The new services will reduce the time people spend on hold waiting to talk to an IRS representative. And the agency plans to launch a redesigned Web site with more interactive features. IRS officials also plan to ask Congress to extend the filing deadline by as much as a week for taxpayers who file electronically.

IRS Commissioner Charles Rossotti last week told a conference of the Council for Electronic Revenue Communication Advancement that current events could spur more people to file electronically — not because of concerns about mail delivery, but rather because "most people want to do what they can" to support government and society.

"It does help us if we can reduce the volume of paper," Rossotti said, but he added that the IRS will continue to process paper returns.

Tax preparers attending the conference said the terrorist attacks would only encourage people to do more work online. "There's a compelling case for e-filing," said Robert Weinberger, vice president of government relations for H&R Block. "Ten packets of Sweet 'N Low could shut down a service center."

The 'e' is for easy

Internal Revenue Service Commissioner Charles Rossotti announced new services to take the agency from a paper-based system to a paperless one. The services include:

* Tracking tax returns online.

* Allowing taxpayers to choose personal identification numbers for electronic filing.

* Permitting citizens to pay taxes online using a credit card.

* Improving communications between tax preparers and IRS representatives to resolve tax questions online.

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