Marylanders will file more than a million fewer forms when they do their state taxes this year, but they may get a bigger kick from filling out a new, extra one on their federal return -- one that lets them get their federal refund deposited directly into their bank account.
"The 1995 tax filing season will be one in which many taxpayers experience firsthand the benefits of high-tech modernization," Paul M. Harrington, IRS district director, told a news conference yesterday at the agency's district office in Baltimore.
Previously, direct deposit had only been available to taxpayers who filed their returns electronically, either through a preparer or using commercial tax-preparation software, IRS spokesman Domenic LaPonzina said.
Like electronic filing, the paper form that the IRS unveiled yesterday will cut the time it takes the IRS to process refunds. But the direct deposit, which automates only part of the process and requires taxpayers to use an extra form, is still slower than electronic filing.
Where an average return filed in the traditional method would be processed in six weeks, the IRS can handle the average direct-deposit refund on a paper return in five weeks and the electronic return in three weeks, Mr. LaPonzina said.
"You're still looking at about five weeks," Mr. LaPonzina said. "Instead of waiting for the mail, it's going to get the direct deposit into your account sooner."
The state does not offer direct deposit of tax refunds, said Marvin A. Bond, a spokesman for state Comptroller Louis L. Goldstein.
The other big change this tax season is the IRS' TeleFile system, which allows people who have used form 1040EZ in the past to file their returns by telephone. Instead of doing paperwork, eligible taxpayers can gather their W-2 forms and other income information and call an 800 number, which will lead them through an interactive voice mail program that takes about 10 minutes.
TeleFile is open to taxpayers who are single, earn less than $50,000 annually, and live at the same address they reported on last year's taxes.
The last requirement was added as a guard against con men who have tried to defraud other electronic-filing efforts, especially the earned-income tax credit.
Mr. Harrington said TeleFile will be available to about 500,000 taxpayers in Delaware, Maryland, and Washington, the area served by the Baltimore IRS office.
Overall, the state mailed out tax form packages to about 2.2 million Marylanders, including single post cards sent to 200,000 people who used paid preparers last year.
At the state level, a 30 percent cut in the state budget for seasonal employees forced officials to cut the paperwork burden on Marylanders.
The big changes: Marylanders who itemize their deductions will no longer have to send the state a copy of the Schedule A from their federal return, and Marylanders who claim the child-care tax credit will no longer have to send along copies of their federal child-care expense forms.
"It all adds up to about 1.7 million forms that we've just plain eliminated," Mr. Bond said, including 500,000 forms for businesses and about 1.2 million for individuals.
About 41 percent of Maryland taxpayers itemize deductions, a figure well above the national average.
This is partly because the state's high housing costs make available higher-than-average deductions for mortgage interest, and because Maryland's relatively high state and local taxes are deductible on the federal return.