Tax Software: E-File or Mail?

By Harry Sit

This is part 3 of my posts about tax software. Other parts in this series:

Part III: E-File or Mail?

In previous years, both TurboTax and TaxCut included one free Federal e-file rebate in their deluxe edition and up. This year e-file costs extra. The IRS doesn’t charge the vendors for e-file. So the e-file charge is just another revenue driver for the vendors.

Even when they had the free e-file rebate in previous years, I always printed out my return and mailed it at the post office. Why? Because I care about the security of my tax data. When you e-file, your software doesn’t talk to the IRS directly. It uploads the data to the e-file provider’s computer and they e-file it for you. Why do I want my data on someone else’s computer? What happens to my data after that? I don’t know. Again, they can’t lose my data if they didn’t have my data in the first place. The cost of stealing mail is a lot higher for the thieves than the cost of hacking computers. The yield is a lot lower too. If a thief overseas wants to steal my tax return in the mail, they will have to first come to this country, intercept the mails, sift through all of them and grab what’s useful to them. If a hacker wants to score some tax return data, they will do it from the comfort of their desk.

E-file gets the refund faster? True, but I think my data security is worth much more than the small interest on the refund.

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Software picked, likely related posts:

Posted on January 25, 2007 under Taxes.

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Comments

5 Comments on Tax Software: E-File or Mail?

  1. samerwriter on January 25, 2007
     

    E-file makes me absolutely livid.

    Right now, I print out about 20 pages of tax documents. I drive them to the post office. I wait in line. I pay perhaps $5 for stamps. The returns go onto a truck to the airport. They ride on a plane to Utah, where the whole process is reversed. The IRS scans them into a computer. How ridiculous.

    E-file should be so easy. No paper, no cars, no lines, no stamps, no planes, no scanners. My computer hooks up to the IRS and sends the data over. It should save me money and time, and it should save the IRS money and time.

    AND YET I HAVE NO OPTIONS FOR DOING THIS!

    For some completely inexplicable reason, I have to pay money to e-file. If it saves everyone involved effort, why should I have to pay for it? Adding insult to injury, the IRS advertises their “freefile” system, which offers free e-file to poor people. No doubt subsidized with my e-file dollars. Screw that. To me, that seems like an effort to convince poor people to spend money for computer tax software.

    So I refuse to pay to e-file. I refuse to e-file for “free after rebate”. The $10 fee isn’t the reason, it’s the principle of the thing. I write my congressmen every year to complain about this issue.

  2. TFB on January 25, 2007
     

    samerwriter,

    I’m glad we are on the same page on this and many other issues. I refused to e-file for data security reasons. Until I get a direct connection to the IRS, I won’t e-file.

    The tax prep software industry made a deal with the IRS: they offer “free file” program to low income people, in exchange, the IRS promised not to offer e-file directly to the taxpaypers. In effect the IRS carved out a sizable business to the industry. The “free file” program is very much like a customer acquisition tool. College students with low income qualify for free file. They use it and get hooked on it. After they don’t qualify for it any more, they will likely continue using it and pay for it because (a) it has their data and (b) they are already familiar with it.

  3. John Hurst on January 1, 2011
     

    That the IRS protects an artificial industry at the expense of citizens whom are required to file taxes is an insult. Not only should filers be allowed to file electronically for free, so too should they not have to purchase software to do those taxes which are required. This is the digital age and any organization that values clients or customers go to great lengths to make it clear the way for those customers to do business with them. Instead, the IRS allows trolls to extract a fee from those required to cross the bridge.

  4. Haywood Jablome on March 28, 2011
     

    The income restrictions for free e-filing are ridiculous and Virginians who have to pay to e-file should refuse to do so. Use TurboTax or your tax prep software to print out the state form. It is typically concise and easily mailed in a standard envelope. Make them handle, process, scan and record your submission. It will take a bit longer for you to get your money but perhaps the Commonwealth will get the picture if 4M returns flood into the Director of Finance.

  5. PFK on March 29, 2012
     

    There have been problems with mailing returns to the IRS. Many IRS mail processing centers are handled by contractors. Remember what happened down in Philadelphia about 10 years ago? When the contractors couldn’t keep up with the mail and they hid or destroyed over 71,000 returns?

    http://files.pittsburghlive.com/trib/pdf/ptr/ptr032802.pdf

    Plus with e-file there are less input errors and everything has a date/time stamp. You have a nice receipt as to when the IRS received the return as opposed to a USPS green return receipt.

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