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February 18, 1999
Web posted at: 4:06 p.m. EST (2106 GMT)

by Mike Hogan

INTERACTIVE:

Will you file your taxes online this year? Yes No View Results

(IDG) -- This is clearly a watershed year for Web-based tax preparation and filing. The sites of long-time tax-application leaders Intuit and Block Financial are now serving a significant number of filers, and about a half-dozen other sites have popped up in recent weeks to challenge them.

One established challenger finally coming into its own is SecureTax.com. The company released its first tax-preparation software and service three seasons ago, but it's really taking off this year. Although it's still very early in the season, tax filings are running at pace to reach five times the 45,000 returns filed through SecureTax.com last year, reported Universal Tax Systems CEO Randy Tullos.

Consumers are more willing to file online because they're becoming more comfortable with the Web, Tullos said. In addition, the IRS is pushing electronic filing in a big way, promising that electronically filed tax returns will be processed faster and result in quicker refunds than manually prepared returns.

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SecureTax.com is a moderately easy-to-use site -- especially for simpler returns -- that, in most cases, is cheaper than using Intuit's WebTurboTax or downloading the Web edition of Block's Kiplinger's TaxCut Deluxe. Some new sites, such as OneTax.com, are limited in scope, but SecureTax.com can accommodate the most complex returns.

Name, please

It's easy to get started. You don't have to give a credit card number until you print or electronically file your return. SecureTax.com assigns you an account number and you choose a password. This way, you can jump in and out of SecureTax.com's questionnaire any time, and from any computer with Internet access.

As long as you stick with the questionnaire, you'll be on firm ground. It walks you through the tax forms in a logical order, much as the steps might appear in your tax-preparation booklet. SecureTax.com uses a desktop folder metaphor not unlike those in WebTurboTax and TaxCut, but more closely resembling a Windows properties dialog box. The software fills in the major elements of your return as you work toward the summary folder, which shows your final return and a running total of any refund due.

SecureTax.com lacks the split-screen interface of tax programs that show the data being poured into the actual tax form below. This is a necessary sacrifice for the sake of online speed, however. And SecureTax.com is coded in HTML, rather than dynamic HTML, so it can run with slower modem connections.

One tab offers a forms view, while another pops up a page listing the forms you've completed and those you should add. Tax programs have wrestled with this organizational problem for years, and SecureTax.com's solution is several generations old. You lose the sense of which form your data is going into, and can get lost hopping around -- a problem that is only exacerbated by slow Web page downloads.

Another shortcoming is that the interview takes you through every question, whether they all apply to you or not. For example, it asks about every kind of income, prompting you to provide amounts for both you and your spouse even if you indicate in the opening screens that you aren't married. While this isn't a big deal, the intelligent elimination of unnecessary data entry is something TaxCut and TurboTax implemented long ago.

Quick and cheap

Most filers won't be bothered by these shortcomings, for the simple reason that most returns are simple. SecureTax.com does, however, support every flavor of 1040, Schedule A deductions, child-care credits, individual business income, capital gains, and rental property -- there some 1100 forms in the online product. You can also download in Adobe Acrobat format any of more than 4000 federal forms (can you believe that U.S. taxpayers need 4000 different forms to file taxes?), as well as forms for all 45 states that have income taxes.

Many 1040EZ filers can use the TurboTax and TaxCut sites free. But those with more complex returns who might be charged $40 on those sites will probably save money using SecureTax.com. Its rate for tax preparation and electronic filing of both federal and state taxes is $14.95 for 1040 or 1040A filers and $9.95 for those who qualify for 1040EZ.

Various deals with organizations and government agencies provide discounts on SecureTax.com's already low prices. For example, you get a $1 discount if you link to the site from the IRS Web site, and $2 off if you link from the AARP site. Missouri residents can get a $5 discount, and SecureTax.com appears to be the tax package of choice for Microsoft's MSN Money Central portal, which links to it--although with no apparent discount.

Web-based tax filing isn't going to provide you with the same level of detail and comfort as CD-ROM-based software. On the other hand, there is no program to install and you get the convenience of being able to log on from any computer. If you have your W-2 forms, 1099s, and other tax-related documents together and yours isn't an exhaustive return, you should be able to finish your taxes in an hour.

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