Filing Choices

In response to our customers' desires for simpler, high-tech options, the IRS offers a number of filing alternatives to traditional paper forms. TeleFile, the file-by-phone system for single 1040EZ filers, expanded nationwide this year and is completely paperless for the first time. Electronic filing and computer filing options have expanded as well. These alternative filing methods offer such benefits as:

• More accurate returns. Returns filed electronically or in the 1040PC format are more accurate because the software programs involved catch and correct mistakes while preparing the returns. If there are errors on electronically filed returns, the system alerts the senders within a day or two so they can make corrections and re-transmit the return. 1040PC format returns are easier for IRS data transcribers to process, reducing errors. Electronic and TeleFile returns do not need transcription, as the data arrives at IRS computer-ready.

• Acknowledgements of receipt. Usually within 24 hours, the electronic filer receives a message that the IRS has accepted the return for processing. The TeleFile system gives callers a confirmation number to let them know that they have completed the filing of their returns.

• Earlier refunds. When the IRS receives complete, accurate, computer-ready data, it can usually issue refunds within three weeks, compared to 40 days for paper returns. The refund arrives even sooner when a taxpayer elects to have the money deposited directly into a savings or checking account. For alternatives which involve Direct Deposit, there's also greater security -- no lost or stolen checks.

ELECTRONIC FILING SYSTEM

Electronic filing, in-which accepted participants send tax filing data for their clients to the IRS from their computers, is available for balance due as well as refund returns. This means if taxpayers owe money, they can file returns earlier while still making tax payments by April 15, 1996. For refund taxpayers, electronic filing means a faster refund and the option of having the money deposited directly into their bank accounts.

First tested in 1986, electronic filing has grown to nearly 12 million individual returns in 1995.

Many taxpayers in 31 states will be able to file their federal and state tax returns electronically in one transmission to the IRS. The IRS forwards the state data to the appropriate state tax authority. This federal/state electronic filing will be available statewide in Arkansas, Colorado, Connecticut, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Virginia, West Virginia and Wisconsin, with a limited test in Pennsylvania.

TELEFILE

TeleFile, the IRS's telephone filing system, has expanded nationwide this year, and is paperless for the first time. About 23 million 1040EZ filers who are single, have incomes under $50,000, and are at the same address as last year will receive a special tax package. The package will contain a personal identification number that will act as their signature. This year, certain Earned Income Tax Credit recipients will be able to use TeleFile.

With a Touch-Tone phone, Telefilers will enter interest income, and wages, tax and the employer identification number from each W-2. The telephone call takes about 10 minutes. The IRS will figure the adjusted gross income, the tax and any refund or tax due while the taxpayer is on the phone. Refunds will be sent about three weeks after the telephone filing and any tax due can be paid by April 15, 1996. Last year, the IRS received 700,000 TeleFile returns.

ON-LINE FILING

On-line filing is a program that allows taxpayers to file their tax returns from their home computers through an on-line service company or transmitter.

To file on-line, a taxpayer transmits a completed tax return file to an on-line service or transmitter, which converts the file from the tax preparation software's format to the IRS's format. The on-line service then transmits the return file to the IRS. The IRS will notify the taxpayer through the on-line service or transmitter whether or not the return is accepted.

Interested computer users can get a list of On-Line Filing Program companies through the IRS home page on World Wide Web at http://www.irs.gov or directly by modem at 703-321-8020. This list tells which software is required for each transmitter or on-line service, as well as phone numbers to contact the various vendors about procedures and transmission fees.

1040PC PROGRAM

Home computer users can shorten their paperwork and choose direct deposit of their refunds with tax preparation software that uses the 1040PC format. Unlike traditional forms, which may have many blank lines, the 1040PC format only prints lines with entries. The result is a three-column list that can, for example, cut a regular 12-page return to two pages. Taxpayers sign the 1040PC answer sheet and attach their W-2 forms and any other required signature documents. Standard computers and printers produce the 1040PC format on plain paper.

When a refund is due, the software may give the taxpayer the option of entering the information for a direct deposit to the taxpayer's bank account. When additional tax is due, the program prints out a 1040 voucher to accompany the payment. The taxpayer can then send the 1040PC, the payment voucher, and check to the IRS by April 15, 1996.

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