Tax Filing Alternatives Grow in Popularity

WASHINGTON - Alternatives to traditional paper returns -- electronic filing, the 1040PC format and TeleFile -- have been rather popular in early weeks of this tax filing season, totaling over one-third of the returns received at IRS centers.

The 1040PC format is showing the greatest surge among these alternatives, with 200,000 received, two and one-half times the number filed at this time last year. The 1040PC is a "condensed" paper format, printed from a personal computer. The idea is to print only the lines which have entries, omitting all blanks, and to use a three-column format to save space. This cuts almost any tax return to one or two pages.

The 1040PC is easier for IRS data transcribers to process. Because it is computer-produced, it is more accurate, thus avoiding processing delays. It also allows for direct deposit of the refund to the taxpayer's bank account. Both paid preparers and home computer users can produce 1040PC format returns.

The IRS tests computer software for acceptance into the 1040PC Program. Accepted producers carry a statement that they support the 1040PC format. Among those available for home users this year are Turbo Tax, Andrew Tobias' Tax Cut and EasyTax.

TeleFile -- the file -by-phone system is being tested in Ohio for the second year -- received the first totally paperless tax return in its first eight minutes of operation on Jan 14. Callers from northern Ohio complete their tax filing by mailing a Form 1040-TEL and their W-2s from employers. Those in southern Ohio give all their information by phone, concluding with a voice signature that the IRS records and stores on laser disks. The IRS had received 75,000 Telefile returns as of Feb.5.

Electronic filing is up nearly 15 percent, with 4.8 million returns received. The program also offers taxpayers in 15 states an opportunity for one-stop filing of their federal and state tax returns. In Kansas, North Carolina, and South Carolina, this combined federal/state electronic filing is available statewide. In 12 others, it is available on a limited basis. The process involves a single transmission of data to the IRS, which then provides the state return information to the state tax agency.

The IRS has received over 300,000 federal/state filings already this year, with 90 percent coming from three states offering it statewide. In 1991, when only South Carolina had it statewide, 151,000 taxpayers used federal/state filing.

During this week ending Feb. 5, the IRS received 9 million tax returns, down 9 percent from the same week last year. The IRS expects the filing pace -- affected by employers and other payers having until Feb. 1 this year to issue W-2 and 1099 forms -- will pick up in coming weeks. The IRS has received 14.6 million of this year's projected total of 117 million returns. At $1,140, the average refund is up 1.4 percent.

                    1993 FILING SEASON STATISTICS

          Cumulative through the week ending 2/7/92 and 2/5/93


                   1992            1993            % Change


Individual Income Tax Returns

Receipts              16,859,000      14,581,000      -13.5
Processed              7,872,000       7,789,000       -1.0


Filing Alternatives -- Total Receipts:

Electronic Filing     4,205,000        4,814,000       14.5
1040PC Format            80,000          200,000      151.6
TeleFile                 72,000           75,000        4.2


Refunds Certified by the National Computing Center:

Number                2,527,000        2,315,000       -8.4
Amount of principle   $2.841 billion   $2.638 billion  -7.2
Average refund        $1,124           $1,140           1.4


Taxpayer Service Filing Season Statistics

                     through 2/8/92    through 2/6/93

Toll-free phone      5,183,258         4,923,015
 calls answered
Tele-Tax calls       3,059,646         2,969,582
   Technical tapes   1,751,674         1,341,067
   Refund Info.      1,307,972         1,628,515

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