Computers are taking the sting out of filing taxes for an increasing number of Utahns.
As of last week, more than 51,000 Utahns had filed 1993 federal tax returns electronically, up 12.3 percent from last year. Another 6,302 taxpayers have filed state tax returns electronically, compared with 179 who used the method in a pilot program in 1993.So far, 15,893 taxpayers have used 1040PC software programs to figure their returns.
Tax software programs and electronic filing make tax reporting easier, faster, safer and more accurate, according to the IRS and some taxpayers.
Electronic filing cuts the lag time between sending off a return and receiving a refund from eight to three weeks - two weeks if you direct the IRS to deposit the money directly into a bank account. It also cuts paperwork for the government.
"It costs $2,000 less than a CPA and does it quicker and less painfully," said Chris Harding, a manager at Babbage's, a software store in Orem's University Mall.
But that message hasn't made it to the masses yet, despite the annual increase in electronically filed returns.
The 51,864 Utahns who filed electronically so far represent just 7 percent of the state's 735,000 taxpayers.
"I'd love to figure (the low participation) out so I could do some additional marketing," said Bobbie Butters, IRS electronic filing coordinator. "One of the reasons we've come up with is that this is a more conservative state. Many people don't want to pay extra money to get a refund faster."
While anyone can use an approved tax software program to compute his or her taxes, only certified electronic filers can transmit returns to the IRS.
In Utah, 440 preparers have IRS approval to file federal income taxes electronically. Thirty preparers are certified to transmit state tax returns electronically. Most preparers charge a fee for the service.
Tax One Inc., which has seasonal offices in 15 grocery stores, charges $35 to transmit forms prepared by a taxpayer. The firm charges $25 to transmit returns it prepares. Fees are similar at H&R Block offices.
The fee may deter some taxpayers who do their own taxes armed with a pencil and a 29-cent stamp.
But Tax One manager Jim Dwyer says cost isn't stopping clients at Tax One's office at Harmon's in West Valley City. Three-fourths of the 900 returns the office has handled were filed electronically, Dwyer said. In most cases, taxpayers did the work and then paid Tax One to transmit the information to the IRS.
If the IRS has its way, most taxpayers will file taxes by computer in the future.
By the year 2000, the IRS aims to have 100 million taxpayers filing returns electronically - 88 percent of all returns filed. This year, an estimated 15 million taxpayers will file by computer.
From the IRS's point of view - and that of many taxpayers - using a computer to figure and send taxes is the only way to go.
It's fast. Tax One can interview a client and have a return ready by the time the client finishes grocery shopping, Dwyer said. Consumer software programs for home computer users are just as quick and easy, according to a number of taxpayers contacted by the Deseret News.
For the second year in a row, Harding used TurboTax, a software program made by ChipSoft/
Intuit, to file his income tax return. It took Harding 30 minutes to fill out and transmit his federal and state tax forms to the IRS via modem (he's a certified electronic filer).
That included the 15 minutes it took the software program to compute the best way for Harding to file, given his answers to tax questions.
"It's definitely quicker and it's definitely cheaper," Harding said. "What you safeguard from is a computer can't lie, a computer can't cheat and a computer can't steal from you. Everyone who has a home computer should use this."
TurboTax costs $35 at most retail stores. Other popular tax software programs range in price from $10 to $35; annual upgrades that cover changes in tax laws cost $10 or less.
Computerized filing also is more accurate. The error rate of taxes filed electronically is one-half of 1 percent, according to Carol Fay, IRS district director at the Ogden Service Center. The error rate for paper returns is 21 percent.
And no offense, but tax software programs are smarter than the average taxpayer when it comes to tax law. Deseret News associate city editor Chuck Gates did his mother's taxes this year using Computer Associate's CA-Simply Tax. The program found a credit she was eligible for but had never taken in the past, Gates said.
And one other bit of good or bad news, depending on how you look at it: using a computer program and/or filing electronically doesn't affect your odds of being audited one way or another.