TAXPAYERS CONSIDER ELECTRONIC FILING OPTIONS FOR QUICK REFUNDS

Millions of Americans who have allowed the government interest-free use of their money for a year are now paying extra to get it back in a hurry.

That may be the bad news about the Internal Revenue Service's electronic filing, but the good news is that the system results in far fewer errors by taxpayers.

The electronic filing system also saves the IRS and the government millions in processing costs.

The good news for the taxpayer is the expedited refund.

The 6-year-old program was used in 1992 by more than 10 million Americans almost 9 percent of all returns. That figure was up 30 percent over the number of electronic users in 1991, and it could increase that much again during the 1993 tax season.

The system is simple: Instead of mailing your tax return you hand it to a company that files it via computer and telephone line directly into an IRS computer. Or, more likely, you hire one professional to do it all: complete your return and then zap it to the IRS.

At the peak of the tax-filing season a mailed paper return usually produces a refund check in seven or eight weeks. An electronic return cuts that wait to three weeks ... two weeks if the check is transmitted directly into a bank account.

If that isn't fast enough, taxpayers can take out a refund anticipation loan from a bank or other financial entity, pledging the refund as collateral.

H&R Block offers a variety of electronic filing services this tax season, including refund anticipation loans.

"H&R Block's electronic filing services are available to taxpayers whether or not Block prepares the returns," said Lee Kimmel, district manager of the Cape Girardeau H&R Block office. Offices at 1471 N. Kingshighway and at Sears in Town Plaza will computer-check returns and file them electronically to the IRS, he said.

"Taxpayers will have peace of mind in knowing their federal returns have been received and accepted by the IRS," said Kimmel.

Several options for refunds are offered by Block:

With the direct deposit option, the taxpayer can instruct IRS to deposit their refund directly into their bank account, which takes about three weeks.

The taxpayer may choose to receive an IRS refund in the mail, which takes about four weeks.

One of the most popular options is the refund anticipation loan, which is the fastest way a taxpayer can get his money. Qualifying taxpayers can get a loan check in a matter of days if their refund amount is between $300 and $3,300. For refunds between $3,300 and $10,000 taxpayers can choose a split refund anticipation loan. A check for the first $3,300, minus fees withheld, is available in a matter of days. A loan for the balance is mailed to the taxpayer in about three weeks.

"A new option this year is the electronic refund," said Kimmel. "Taxpayers can enjoy the speed of direct deposit without the need of a bank account, and any refund less than $10,000 qualifies."

H&R Block prepared a total of 6.7 million, or 62 percent, of all electronic returns received by the IRS in 1992.

"Electronic filing is very appealing to people who want to get that money back quickly," said Kimmel.

Nearly 80 percent of taxpayers get refunds each year, said the IRS. Many deliberately have too much withheld from their paychecks just to get a big refund. These people are big users of electronic filing.

An IRS study concluded the number of electronic filers would double if the transmission fee were under $20 and a refund could be assured within five days.

Electronic filing can also reduce errors. In 1991, taxpayer errors were found on 6.8 percent of paper returns and IRS personnel chipped in another 5.3 percent. But the combined error rate on electronic returns, which must be checked thoroughly by computer before being sent to the IRS, was only 2.6 percent.

The computer assures the taxpayer that the return is mathematically correct and will be accepted by the IRS. Electronic filers don't have to worry about whether the return was lost in the mail; the IRS notifies the transmission company electronically after a return is accepted.

That peace of mind may be enough to attract many taxpayers who aren't due a refund. Last year for the first time taxpayers in every state who still owed the IRS could file electronically anytime before April 16, even though they waited until the deadline to mail the check.