From...

April 23, 1999
Web posted at: 5:57 p.m. EDT (2157 GMT)

by Christina Wood

(IDG) -- "Stop! You don't have to write that check to the IRS."

So proclaims a headline on the Internal Revenue Service Web site. But it doesn't mean that you're off scot-free. Rather, the IRS is encouraging you to file electronically. Starting this year, tax payers equipped with a credit or debit card were able to file their taxes directly from Intuit's TurboTax and H&R Block's Taxcut sites.

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This is the first step in the IRS's campaign to push e-filing, which the IRS hopes will handle 80 percent of returns by 2007, says James Punishill of Forrester Research. A record number of tax payers went to the Net to file this year. And, adds Punishill, "it didn't blow up."

Smooth sailing on tax day

If everything went smoothly at Intuit, it's because the company shut down the site for hours, three days before the April 15 deadline, to back everything up, Punishill explains. While some people were angry that they couldn't get online during that time, Intuit "did it intentionally to make sure they could handle peak volume on the 15th."

The Intuit site handled 1.6 million electronic filers, up from 689,000 last year. Taxpayers filed via TurboTax, MacInTax, and the new WebTurboTax online, which Intuit reports handled 240,000 Federal and 148,000 state returns.

Things went equally well at H&R Block's Web site. Gene Goldenberg, vice president and publisher of Block Financial, says that as of Monday, "we've processed 605,000 accepted returns. That's up from 210,000 last year, a 188 percent increase. And we didn't have any down time."

No excitement over e-filing

There are lots of reasons to file electronically, not the least of which is that it hastens the arrival of your refund check by as much as six weeks. Tax software also does all the calculations and keeps track of last year's numbers.

But despite the buzz over the IRS new credit card payment scheme, experts agree there still isn't much of an incentive to file electronically. And it's not free, although fees are quite low.

Ultimately, financial institutions will popularize electronic filing, Punishill thinks. "This year Vanguard and Fidelity subsidized tax filing for their best customers," he points out. That tactic should build customer loyalty. "It's not too much of a leap to think that in future years, they will download your 1099 to the Web site," he says

That could be the start of something really handy for customers. With Web sites keeping track of last year's returns, and employers and banks sending forms over the Net directly, taxpayers may not have to assemble a thing. In the end, the only pain associated with tax time will be coughing up the dough.