a few stats for tax time

Only sort of related to libraries, but since it’s National Library Week and coincidentally tax week in the US, I thought you might be interested in reading this article about how and why the IRS is moving to e-filing. To me this touches on some digital divide issues. It’s significantly cheaper for the IRS to process a return submitted online.

It costs nearly $3 to process a paper return, but processing an electronic return costs only about 35 cents. The error rate on paper returns is 20 percent, which consumers must compute and workers must enter into IRS computers, compared with 1 percent for e-filed returns.

People also get their refunds more quickly. There are fewer errors with online returns.

Yet after 20 years of e-file availability, we’re still only seeing 66% of returns filed online. And this is happening even as printed state (NJ, KY) and federal tax forms are becoming less and less available in libraries. Some states aren’t even printing the big tax form notebook anymore. And some states aren’t mailing print forms. Some county library systems haven’t been doing the tax form thing for nearly 20 years. The article examines why. If you are helping your patrons file online, be aware that there are free options available for low-income filers and even discounts for non-low income people if they know where to look. My bank, for example, had a discount on TurboTax’s usual rates available just by me clicking a link on their website.

And I’m trying to track down the copy I had of the letter we got at one of the small rural libraries from the IRS that basically said they wouldn’t be sending us printed tax forms anymore. This was back when we still had a dialup connection and it was mighty inconvenient. Having a hard time remembering when this was. Anyone know?

8 Responses to “a few stats for tax time”

  1. Shelley Says:

    Definitely related to libraries: Huffington Post in their book section has a pictorial story about “amazing libraries” as well as a story on the problems libraries may face in the future.

  2. Liam Hegarty Says:

    I’m not so sure about the IRS refusing to give forms to libraries. They are still sending them to us at my mid-sized suburban library. Maybe it’s a function of the size of the library?

    As for states not mailing forms, I’d like to add New York to the list. We found out they weren’t mailing out forms anymore when a patron brought in a postcard from the Department of Taxation and Finance stating that as a cost cutting measure they were no longer mailing forms but they could be picked up for free at their local library. The sudden spike in demand caught us unprepared and resulted in at least one patron accusing the library of wasting tax dollars because we didn’t have the forms he wanted when he wanted.

    By the way, this was just about the same time the post office stopped stocking tax forms as well.

  3. Johanna Says:

    As long as folks able to e-file for free, I think it’s worth considering. However, I don’t think anyone should have to pay $30 to a private company to save Uncle Sam $2.65. Also, why isn’t there an e-filing option that doesn’t involve a 3rd party, whose privacy policies may or may not be great?

  4. Allison Says:

    Wow–interesting stats. And totally library related. In my state, the only option for people who want to file paper returns is to download and print a copy at home, or to go to their local library and photocopy the masters or print a copy off a public access computer.
    I think the state would be a lot more successful in getting people to do the e-returns if a) their e-file system was not horribly difficult to use and b) if they provided (or assisted libraries in providing) *private* spaces in the library for people to come and e-file. The public’s desire to expedite filing is there, the technology to do so is not.

  5. Rhonda Says:

    We are not provided paper tax forms anymore at our library. We are provided a dvd that people can use to print off forms, and a set of reproducible, laminated forms from the irs. But some of the forms still have printed warnings on them that you “must use official irs forms”, which puts some people off. Also, companies figure out underhanded ways of getting money, even from “free” filers. If you opt to have the cost of the return taken out of your refund you are clipped something like $30.00. Lots of people select that option before they realize there is such a hefty fee and then just end up paying it because they don’t want to risk losing all that work.

  6. jessamyn Says:

    > why isn’t there an e-filing option that doesn’t involve a 3rd party, whose privacy policies may or may not be great?

    That’s the rub for me. Basically the IRS agreed to not go into competition with private companies but the deal is that companies need to provide free options for people of low [under 50-ish K] incomes. This is all fine. The big issue to me is like yours private companies have whatever privacy policy and I personally did not enjoy TurboTax trying to upsell me a million ways and suggest I spend my refund on Red Lobster cards or whatever. Slightly concerning. Agreeing with Rhonda as well, people who are not used to this sort of software interface do wind up getting dinged for odd expenses, even in the “free” version.

  7. Meg Says:

    In theory, my great state still sends paper forms to libraries. In practice, this amounts to us calling them to order more forms and them telling us they won’t send more, so we print the pdfs off the state website and charge people the library’s usual fee to print in black and white. No, we don’t like it either, and we have small copies of instructions for how to do it at home for both state and federal forms typed up to give to people, but considering the budget cuts we took this year, we can’t afford to just act as the printer for the state.

    Actually, people have been surprisingly pleasant about it this year compared to past years. Now that I have said that, I have cursed myself and the Vast Hordes of the Unhappy who were merely gathering in the parking lot shall descend to make me regret that comment…

  8. Michael Golrick Says:

    More of a rub for me is that if your income is over a certain level, they want you to pay. The irony is that those are the forms which are more likely to be complicated, and therefore more prone to errors and e-filing would save above the average cost.

    This year I explored e-filing, but it never worked out for me because I got 4 different numbers from four different services, and all were different than what I figured out myself — and I actually have an MBA in addition to the MS in LS — I think I can do this!

    Next year, I will again be above the income limit, so back to paper only, unless they change the rules. Hmmmm, I may write to my “Congress-critter” (as an ALA Council colleague used to call them..)