Bush to propose giving electronic tax filers an extra 10 days, free Web filing

Wednesday, January 30th 2002, 12:00 am

By: News On 6

(WASHINGTON) - To encourage greater electronic tax filing, President Bush wants to give e-filers an extra 10 days to get their returns in and begin designing a system allowing more people to file directly to the IRS via the Internet for free.

The president will make both proposals in his budget submission to Congress, which is due out next week. Details were provided Wednesday to The Associated Press by the Treasury Department.

About 45 million taxpayers are expected to file electronically this year. But that means close to 90 million will not, even though e-filing promises faster refunds, far fewer errors, lower cost to the government and specific acknowledgment that the return made it to the Internal Revenue Service.

One barrier is cost: Private companies can charge $12 to transmit a return, compared to 34 cents for a postage stamp. And many taxpayers are concerned about protecting personal financial information given to these companies.

Treasury Secretary Paul O'Neill said the 10-day deadline extension _ which wouldn't take effect until the 2003 tax filing season if approved by Congress _ is intended as extra encouragement for people to try electronic filing.

The proposal for free Internet tax filing is potentially more far-reaching and could stir up some controversy. O'Neill said the IRS will ``reach out and work in a new partnership'' with private companies, an attempt to head off resistance from businesses concerned about competition from the government.

Electronic filing is currently done by private companies, some of which charge no fee, that are approved by the IRS.

``I don't intend for the IRS to get into the software business, but rather to open a constructive dialogue with those who already have established expertise in this field,'' O'Neill said in a written statement.

IRS Commissioner Charles Rossotti said the agency will hold a forum to listen to industry leaders, which include such companies as Intuit Inc., maker of TurboTax software, and H&R Block, which markets TaxCut software.