Stateline Story

Taxpayers Generally Slow To Take Advantage Of Online Filing

  • April 15, 1999
  • By Joseph Giordono

WASHINGTON - Forty-eight hours before the midnight April 15 deadline, 24,851 New Mexicans had filed their person income tax returns over the Internet, according to Victoria Bransford, spokeswoman for the Department of Taxation and Revenue. By comparison, only 3,757 Internet returns had been filed in Indiana and 1,430 filed in South Carolina, the other two states that responded to stateline.org inquiries.

"Word of mouth is what is going to make it continue to grow. I liken it to the confidence that consumers have, similar to the growth and acceptance of ATMs. It wasn't terribly long ago that people didn't trust them, either," said Jim Burleson, Deputy Secretary of the New Mexico Department of Taxation.

Nine states currently offer taxpayers the option to file their taxes online without using third party Internet or tax preparation services: Colorado, Delaware, Illinois, Indiana, Kansas, Massachusetts, New Jersey, New Mexico, and South Carolina.

In its inaugural year of 1997, the New Mexico PIT 1-A Internet tax filing system attracted a total of 8,013 filers. Revenue officials point to the speed and efficiency of the technology as the primary reason for the explosive growth of users in only the program's second year of existence.

By 2002, the department hopes to have 200,000 users per yeara number that equates to one-quarter of all New Mexico tax filers. An added bonus to both taxpayers and revenue officials is that electronically filed returns are all but ensured to be error-free.

The design of the Internet program does not allow a user to file a return unless it is filled out correctly. A taxpayer cannot proceed from one line to the next unless the previous section is error free.

At the Department of Taxation's end of the system, a computer processes the returns and checks are sent out to those who are due refunds. New Mexico officials estimate 500 Internet filings are done per day. The system also lets taxpayers who owe the government money have the money deducted from checking accounts or charged to credit cards.

It is this added feature from last year that could explain the jump in users, officials say.

"Last year it was refunds only. This year it's for people who are expecting refunds or who have liabilities. We hope to keep expanding our services," Bransford said.

He was surprised to find that every one of the of the nearly 25,000 users of the Internet system were due a refund.

New Mexico officials anticipate extremely heavy April 15th filing traffic, but have assured taxpayers that the system will not crash.

At the Indiana Department of Revenue, on the other hand, officials have been thoroughly underwhelmed by the response to IT-40 Express, the Internet filing system they inaugurated in February. Of the 1.2 million state tax returns processed so far by the Department, only 3,757 have come via the Internet.

Non-paper returns in general, though, have reached record levels. More than half of all returns have been filed either over the telephone or through third party professional tax preparers who file electronically.

Indiana officials attribute the low numbers of Internet returns to a lack of publicity. The system was not announced until after tax forms were mailed in December, and state law forbids the department from spending money to advertise methods of payment.

Indiana taxpayers can use the IT-40 system if they have already completed their federal tax return and have access to versions equal to or higher than Internet Explorer 3.0 or Netscape Navigator 3.0 and Adobe Acrobat 3.0 or higher.

Revenue officials hope that in future years, the system's accuracy will help increase usership. About 14 percent of Indiana's paper returns have errors in them, while built-in accuracy checks keep that number to just below 1 percent of electronic forms, officials said.

South Carolina's SCnetFile program has been equally disappointing in its debut tax season. As of Tuesday, only 1,430 returns have been filed over the Internet system, with only another 150-200 expected, said Keith Wicker of the South Carolina Department of Revenue.

SCnetfile is available to full-year South Carolina residents who are filing either short or long form returns, and who did not file Schedules C, D, E or F with their federal tax return. The Department of Revenue says that it will analyze this year's filing numbers to determine how, or if, the program will be expanded in years to come.

"By not having our system in place until February, we really got a late start and didn't expect to have huge volume," Wicker said. "Of the total of about 1.8 million filers, almost one-third use alternative filing systems such as telefile, so it's just a matter of time before we think they will jump."