Many taxpayers using free electronic filing

IRS expects to exceed the projected 2.5 million

April 01, 2003|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

With 2.1 million taxpayers taking advantage of free electronic filing so far, the Internal Revenue Service's program is on target to surpass projections.

"We've been projecting 2.5 million; we should pass that easily," Terry Lutes, IRS director of electronic tax administration, said yesterday.

This is the first year that the IRS has offered free electronic filing through a partnership with 17 tax preparation companies. Under a three-year agreement, the companies provide the service for free in exchange for the IRS not getting into the business itself. Free-filing is available at www.irs. gov.

With the April 15th deadline fast approaching, the IRS is encouraging taxpayers to file as soon as possible, although Lutes said he doesn't anticipate computer problems with an onslaught of late filers. But late filers might have fewer choices. For instance, OnLine Taxes, one of the 17, stopped offering free filing yesterday.

The companies set the criteria of who is eligible and can make changes twice a year, Lutes said. The service was to be available to 60 percent of filers, or 78 million people, but some companies have expanded eligibility. H&R Block, for instance, increased the income limit of eligibility from $28,000 to $34,000.

Another company, eSmartTax.com, initially offered the service free to residents of New York and Illinois. It has dropped New York but added free filing for residents of North Carolina, Ohio, Georgia and California.

Problems have been few, Lutes said, with complaints being lodged by less than 1 percent of visitors to the IRS free-filing Web page. In some cases, a Web site's design or language confused taxpayers, and the companies made changes to address complaints.

The IRS struck an agreement with the companies to offer free filing at the end of October, said Michael F. Cavanagh, manager of the Free File Alliance that represents the companies.

"There was only two months to get ready for the filing season," he said. "We appear to be finishing with a first year that was far more successful than even we would have imagined."

After the filing season, the IRS will review the program with the companies and see what changes should be made, Lutes said.

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