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Tech Industry

Half of U.S. taxpayers filing online

The IRS expects that the number of people filing electronically will surpass the 50 percent mark for the first time this year.

The promise of quicker refunds is spurring about half of U.S. taxpayers to file their federal income taxes electronically, according to new data.

Adobe Systems, the San Jose, Calif.-based software company that counts the Internal Revenue Service as one of its best customers, said Tuesday that a study it commissioned of 1,000 U.S. taxpayers found that 45 percent of them were filing their 2004 taxes electronically. iQ Research & Consulting, based in Washington, D.C., conducted the study by phone during the week of Feb. 21.

Last week, the IRS said that electronically filed returns were up 7 percent over last year, with 52 million tax returns having been e-filed as of April 1.

The IRS said 65 percent of all returns had been filed electronically as of April 1, up from 60 percent filed by April 1, 2004.

When all returns are in, the IRS said, it expects that proportion will have dropped but to have surpassed the 50 percent mark for all returns for the first time.

Respondents to the Adobe survey said they were motivated to file electronically by the promise of faster refunds. Of those who had previously filed electronically--47 percent--92 percent said the experience was either good or excellent.

Adobe provides the IRS with both its Acrobat document-creation software, with which the IRS produces its printable mail-in forms; the LiveCycle Reader Extensions server software; and the LiveCycle Barcoded Forms software, introduced last year, for designing machine-readable printed forms.

Under a deal with tax preparation software and service providers, the IRS doesn't let people file taxes directly through its Web site, but for the third year running it's offering the Free File program to let people file electronically through those providers.

Queried about that restriction, 57 percent of Adobe's survey group said the IRS ought to provide its own online filing capabilities. The way it is now, many taxpayers print tax forms from IRS.gov and mail them in.

According to the IRS, participation in the Free File program is up 44 percent over last year, with nearly 4 million returns being filed as of April 1.

Adobe said its survey likely did not count as e-filers many taxpayers who use a certified public accountant, though the IRS requires CPAs to file returns electronically.