The number of income tax returns sent electronically by people who do their own filing is up 35% from last year, despite rejections from a new system the IRS is using to validate e-filers' identities.
Counting returns from professional preparers, Internal Revenue Service officials project that one of three individual returns will be filed electronically this year. "As folks get more comfortable with the nature of doing things online, we're going to benefit from that comfort level," said Terry Lutes, IRS electronic tax director.
But things haven't gone entirely without a hitch. Up to 15% of e-filed returns have been initially rejected by the IRS so far this year, usually for such things as math errors or mismatched Social Security numbers. They can, however, be corrected and easily refiled.
Some taxpayers are having trouble with the new IRS system for filing electronic returns without mailing in a separate paper signature form. Taxpayers can select their own personal identification number, but they must also validate their identities by including the adjusted gross income and total tax figures from their 1999 returns.
"Those two primary pieces have caused the problem," Lutes said. "There's been no problem with our system. Most of the returns coming in with PINs have been accepted."
The latest IRS statistics show that through March 2, 3.4 million taxpayers had done their own returns and filed them electronically.
The IRS is projecting that 42 million tax returns will be filed electronically by this year's April 16 deadline. The traditional tax day, April 15, falls on a Sunday this year.
More taxpayers are also having their refunds deposited directly into accounts at banks and other financial institutions. Through March 2, more than 20.2 million refunds totaling $45.4 billion had been deposited directly in taxpayer accounts, representing about 60% of total refunds, compared with 53% at the same time last year.
The average refund is $1,872, a 5.5% increase from the $1,774 through early March of last year. In all, taxpayers have claimed more than $63 billion in refunds so far.
Taxpayers also are increasingly using plastic to pay their taxes. As of March 3, about 16,000 taxpayers had used American Express, MasterCard or Discover cards to charge their IRS tax bills--a 171% increase from the year before.