To EFile Or Not To EFile?

Well, it's that time of year again, folks. You've seen the ads for tax' preparing software all over the Net in the past few weeks. Because tax day fell on a Saturday this year, we got a extra cushion. For many, the deadline is tonight. For those in New England, the deadline is pushed off to the 18th, due to Patriot's Day.

According to a recent report from financial reporter Jean Chatzky, most people haven't filed yet. In fact the IRS says about 45 million haven't. Yikes.

What's up with the Californians? According to a survey from, the cities with the greatest percentage of procrastinators include:

1. San Diego
2. San Jose, Calif.
3. Chicago
4. Houston
5. New York
6. San Francisco
7. Phoenix
8. Tucson, Ariz.
9. Atlanta
10. Los Angeles

It's no surprise. Americans flock to the Net to file with the Internal Revenue Service electronically. So who files online? A study of 2,400 conducted by Iomega Corporation this past February revealed that efilers remain skewed toward younger, more affluent, college-educated males.



Nielsen//NetRatings recently reported that traffic to approximately 29 top tax sites saw a 26 percent spike during the week ending Feb. 5, compared to the same period a year ago. Eleven percent of the active Internet universe, or 14.1 million unique users, visited tax sites during the first week in February, indicating that a significant portion of Internet users were getting an early start on the 2006 tax season after W-2's were distributed. was the fastest-growing site, with the number of visitors in the first week of February increasing 84 percent from the same time last year to 2.3 million, up from 1.3 million. was second, with an 81 percent increase, from 519,000 visitors to 937,000 visitors. ranked third with 41 percent growth, from 362,000 visitors to 512,000 visitors.

Nielsen estimates H&R Block increased its ad spend 364 percent, from $496,200 to $2,302,700, year over year. Is it out of preference that so many people file electronically, or because it is the quickest last-ditch attempt for the laggards out there?

Heck, there are advantages, though.

For one, it's easier. When you rush, you are bound to make mistakes. Believe it or not, fewer mistakes are made online. One out of five paper returns has an error. One out of 100 electronic returns has one. It's quicker. When you file online you get a receipt of submittal right away. And, very important: online refunds tend to get to folks quicker.

It's cheaper. If you are a penny pincher, it is cheaper to file online versus snail mail. A mailed-in return costs $2.49 to process vs. 78 cents for one that's e-filed, the IRS says.

And guess how many people have filed their taxes electronically so far this year? 66 million Americans, up 11 percent over last year, according to the IRS.

So what do you think, dear readers? Are you a laggard? Do you (or your accountant) file online? If so, why? If not, why? Will we keep seeing an increase in traffic to tax-related sites year over year, or will this trend eventually plateau? Post to the Spin blog.

In the meantime, I've got to get my extension in.

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