Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 11, 1993 TAG: 9302110007
SECTION: NATIONAL/INTERNATIONAL PAGE: A-10 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
TAX REFUNDS NOT SHRINKING, SO FAR
Early tax-return filers are getting even larger refunds this year despite the withholding reduction imposed last March by President Bush.Through Friday, refunds were averaging $1,140, compared with $1,124 for a comparable period of 1992. However, IRS spokesman Don Roberts said, "We may see that average decline in the new few weeks."
He said one reason for the larger refunds is the continuing growth in the number of taxpayers who file returns electronically - up 14.5 percent from last year. "Generally, electronic filers have higher refunds" and therefore tend to file earlier, Roberts said. As their numbers decline later in the filing season, so will the average refund, he said.
Bush last year permanently reduced tax withholding from the checks of most low- and middle-income workers in an effort to spur the economy by giving consumers an additional $2 billion a month to spend. That changed no one's tax liability; rather, it meant that refunds anticipated this year would be reduced by a maximum of about $298 for most married workers and $149 for singles.
Any worker who wanted to continue under the old withholding rates - a forced saving program allowing the government interest-free use of money - could do so by filing a new W-4 form with the employer. Although there are no official figures, payroll processing companies estimate about 7 percent took that option.
Bush's withholding change means about 12 percent of tax filers will lose the refund they otherwise could have anticipated. Some workers who usually owe the government when they file will have to pay a bit more this year.
Through Feb. 5, the IRS had received almost 14.6 million returns, a 13 percent drop from the 16.9 million received through Feb. 7, 1992. Processing of returns was down barely, to 6.8 million. More than 2.3 million qualified for refunds, up 8 percent from 2.5 million last year.
Fully one-third of the returns - 4.8 million - were filed electronically, compared with one-quarter, or 4.2 million, at the same time a year ago.
In electronic filing, a return - prepared by the taxpayer or by a professional - is sent directly into IRS computers by a transmitting company. This results in fewer errors, far less paperwork for the IRS and a refund three or four weeks faster than if a conventional paper return were filed.
The IRS also reported increasing numbers of taxpayers are using other alternative filing methods this year:
The 1040PC format, printed via a personal computer. Only lines on which the taxpayer has entries are printed, reducing almost any return to one or two pages. Through Friday, 200,000 people had filed this form, 2 1/2 times last year's rate.
Telefile, being tested in Ohio for the second year, is a totally paperless system that 75,000 taxpayers have used this year, a 4 percent increase. Residents in northern Ohio file their tax information by telephone and follow up by mailing a printed Form 1040-TEL and their W-2s. In the southern part of the state, the technology has been carried another step: Nothing to mail - the IRS computer records the taxpayer's "voice signature" and stores it on a laser disk.
Joint federal-state filing. Residents of Kansas and the Carolinas and those in parts of 12 states can make one electronic filing to the IRS, which provides the necessary information to the state. More than 300,000 joint filings have been received this year.