With a little help from the Irs, taxes4less.com aims to convince filers to do their returns on the web rather than go to h & r; block It used to be that finding a CPA or tax preparation firm involved asking Uncle Harry for a recommendation or visiting the nearest H & R; Block office. Now, taxpayers don’t even have to see their accountant, let alone know one personally. Taxes4Less.com, an Encino-based startup, is offering tax preparation services online. The company wants to do for tax accounting what Amazon.com and E*Trade have done for retailing and stock trading. “Do you want to drive a half hour to your accountant and wait in his office, or would you rather do it online?” said Gregory M. Yulish, co-founder of Taxes4Less.com, which launched on Feb. 7. “This is where professional tax preparation is going to evolve to.” The company is getting a boost from none other than the Internal Revenue Service, which has a link that takes users of its irs.gov Web site directly to Taxes4Less.com. But online tax preparation is still in its infancy, and companies trying to corner the market are likely to face some hurdles, especially in light of a programming glitch that shut down the H & R; Block Inc. Web site recently. “That will have a spillover effect to others that do not have consumer trust,” said Jaime Punishill, senior analyst with Cambridge, Mass.-based Forrester Research Inc. Last year, 29.3 million tax returns were filed electronically, most by do-it-yourselfers using tax-preparation software. This year, that number is expected to increase to 33 million, IRS officials said. The growing acceptance of software like Intuit Inc.’s Quicken TurboTax for the Web, and of online banking and stock trading services, convinced Yulish and his partner, Russell M. Gottlich, to open Taxes4Less.com in 1998. The company first went online briefly beginning April 1 of last year, but shut down after April 15 to make changes to the Web site. The company found that people had difficulty figuring out where to input their data, so officials decided to make the process easier. This year, Taxes4Less.com added a call center and instant messaging so customers can ask questions of live representatives. It also added services to represent taxpayers in case of an audit. And it changed the way customers are asked to provide their tax information, including an online form that looks much like the W2 form taxpayers get from their employers. “Last year, we didn’t have it laid out like that,” Yulish said. “People got confused and we were getting all sorts of phone calls. We wanted to make it painless.” The site works this way: Customers use organizer forms provided online to submit their tax data. Upon completing the forms, the site offers up a price list based on the number and types of organizer pages they used. For example, those who use only the federal return form would be charged $35. The interest and dividend income pages are $5 each. The organizer page for a self-employed retirement account is $30. When the customer completes the appropriate pages, he or she tallies up the costs and submits payment information. The company also has a “shoe box return” service. For an additional $50 fee, Taxes4Less will mail customers a shoe box into which they can put all their receipts and other tax documents. The company will then prepare the entire return. Taxes4Less.com officials report that within a day of relaunching the Web site, about 500 potential customers began working with the forms, although it is too early to tell how many of them will actually use the company’s services to file a return. At White Plains, N.Y.-based e1040.com, which launched earlier this year, officials report they are receiving 400 to 500 returns a day. “I don’t know if that’s good or bad,” said Mario Romilio, operations manager. “Truthfully, until April 15, we can’t really say.” For the most part, the 1999 tax year will be the first for these online tax-preparation firms, and industry experts say they have yet to study these types of services. Still, they wonder whether the increased interest in e-filing will necessarily result in more business for Taxes4Less.com. “These guys have to have a compelling reason for customers to change their behavior,” said Punishill. “If they’re going after the delegation folks (who seek assistance with filing their returns), it has to be such an incredible price point difference that justifies me making my world that complex.” That may be especially true in light of H & R; Block’s recent foulup. A software glitch disclosed confidential tax data from some taxpayers to other online customers of H & R; Block. At the same time, Punishill said, the Taxes4Less.com link with the IRS is certain to help promote its business, and other trends may be in the company’s favor. The IRS, which hopes to have 80 percent of tax returns filed electronically by 2007, is offering to provide refunds in half the time it takes to get refunds to those who file by traditional methods, and 11 days for those who also opt to have their refund checks deposited directly into their bank accounts.
