Lori Malone, a third generation accountant at Schenectady accounting firm Bianchi and McDonald, said the proliferation of online tax filing has changed accounting, but has not hurt her family’s firm.
“We don’t advertise at all, so our client base is maintained throughout the years. So we don’t do walk-ins and we don’t do new clients except by referral. We don’t have a turnover of clients,” she said.
According to a report released March 3 by the Internal Revenue Service, the filing of electronic tax forms is off to a fast start for 2008, up 5 percent from last year, with double-digit growth coming from taxpayers filing from their home computers.
“E-filing continues to be the preferred way to file your tax return. It is the fast, easy, safe and more accurate way to file your tax return,” stated IRS Acting Commissioner Linda Stiff.
According to the new filing season statistics for the week ending Feb. 22, more than 12.3 million returns were filed from home computers, an increase of almost 14 percent from the same time last year.
IRS spokeswoman Dianne Besunder said the IRS Web site contains a list of approved online tax filing services. She said the IRS has agreement with a consortium of these tax filing companies whereby they provide “free file” options for tax payers claiming less than $54,000 in income, which she said accounts for about 70 percent of all tax returns filed.
Clifton Park-based accountant Brian Daley said most of his clients don’t fall under the income threshold for free online filing. He said he has no fear of losing clients even if free filing was made available to taxpayers with higher income.
“The type of people that come to me would always come to me. I often amend returns for people who try to do it themselves. They come in here, for whatever reason, and I often amend their last three years’ returns,” he said.
Washington Post Technology columnist Rob Pegoraro recently reviewed the most popular online tax filings services, TurboTax, TaxCut and TaxAct.
“These programs work in the same basic manner, interviewing you about your financial situation before feeding your answers into electronic versions of the usual IRS form,” wrote Pegoraro. “When you’re done, they can file your returns electronically; for an additional fee, they can polish off your state forms, too. The downside of this convenience is that you’ll probably have to take the programs’ word for what you owe.”
Malone said both her father and her grandfather are the principle partners at Bianchi and McDonald and the family operation has retained family customers even as online “do it yourself” tax filing options multiply.
“A lot of times I’m seeing generations of clients, people who went to my grandfather, people who went to my dad. I might have their kids or kids of their kids,” she said. “You’ve got to have a really, really simple return to [file yourself online]. If you’ve got any kind of deductions or business expenses that you’re not familiar with, things change too much [for the layman to keep up with] unless he really reads up on it.”
New York state accounting firms that file more than 250 tax returns are required by state law to file state tax forms electronically, which has prompted many, if not all, local accounting firms to provide electronic filing for federal tax returns.
Bill Zeronda, a partner in Latham accounting firm LCS & Z, said his firm files about 85 percent of the tax returns it processes electronically. He said his firm files about 2,600 individual tax returns per season and most of them are from the owners of the firm’s corporate clients.
“We’re moving toward corporate e-filing as well. Corporate [e-filing] is not required at this time, but it’s much more cost-effective. At some point all returns will be e-filed,” he said.
Gloversville accountant Peter O’Lucci said his firm maintains its base of clients by doing both corporate tax returns and the personal tax returns of owners of corporations.
“It makes it easier when you’ve done all of the corporate work to do the personal returns,” he said.
Malone said her firm uses a $10,000 software program to help file forms online. She said most of Bianchi and McDonald’s clients prefer to defer to them even if they attempt to fill out forms at home themselves.
“We have a handful of customers that come in and do their own tax returns and they just don’t want to sign them. They are afraid they are going to do something wrong [or] they’ve made a mistake on them,” she said. “And the majority of [customers who fill out their own tax forms] do have an error on them that we catch. Nine out of 10 that we look at, we can find an error on it.”
Overall, 46.9 million tax returns have been filed so far in 2008, a 1.5 percent increase from the 46.2 million returns filed by this point in 2007, according to the IRS. So far $106.7 billion in refunds have been issued in 2008 with the average refund amount of $2,708, up 2 percent from the same time last year.
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