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Tech Industry

Tax sites to stay busy on final weekend

With Monday being April 15, tax Web sites and software makers are preparing for a blitz of procrastinators. Traffic spikes posed problems last year. Has the lesson been learned?

Tax software and services companies are preparing for a blitz of last-minute filers this weekend, as more Americans complete their tax chores online.

About 25 percent of the returns filed through Intuit, whose TurboTax products lead the tax software and services market, come in during the last week and a half of the filing season, Intuit spokesman Scott Gulbransen said.

With April 15 falling on a Monday this year, returns are expected to flood in this weekend. Gulbransen said the company will be ready with extra servers, support staff and bandwidth.

"From doing this online for five years, we've built into our system the capacity to handle our busiest day, times three," he said.

Despite a push from the Internal Revenue Service and well-developed products from tax specialist H&R Block and Intuit, online tax preparation has been somewhat slow to take off.

Earlier this year, a survey from research firm Jupiter Media Metrix projected that about the same number of online users would prepare their taxes online as last year. In past years, consumers have cited security and privacy as concerns that have dissuaded them from filing online.

Rob Sterling, a senior analyst at Jupiter, also attributed the reluctance to sophisticated shrink-wrap software programs and a growing number of people using accountants.

"The desktop software applications are very good, if not better than the ones on the Web, and they have fewer concerns," Sterling said.

The online tax-preparation sites have also suffered from being unprepared themselves for the traffic they have received. Last year, some of the more popular online sites slowed significantly as the April 15 filing deadline approached, and Intuit's TurboTax Web site suffered a more than 24-hour outage. H&R Block's Hrblock.com had a two-hour outage during the heat of tax season two years ago.

So far this year, the popular online tax sites have largely been able to avoid system problems, said Joi Chevalier, a product manager at Matrix NetSystems, which monitors Web site performance issues.

"There's been an increase in general traffic and use, but nothing that would deter somebody from going to those places and getting some information," Chevalier said.

And despite past problems, there is some indication that taxpayers are starting to use online tax sites in greater numbers.

Online tax-preparation sites typically see a spike in early February, soon after taxpayers receive their W-2 and 1099 forms from employers and financial institutions. This year, traffic to the popular tax sites such as those offered by the IRS, H&R Block and Intuit in February was up 22 percent compared with last year, according to data from Nielsen/NetRatings. And during the second week of February--when the spike in traffic actually hit in both years--traffic was up 33 percent from last year.

A similar deadline applies for online filing as for paper forms: Paper returns need to have a postmark of at least April 15, and online returns have to be sent to the IRS before midnight local time that same day. (Taxpayers in Maine and Massachusetts have an extra day this year because the Patriot's Day holiday in those states falls on April 15.)

Gulbransen noted that for those who owe taxes, payments have to meet the same deadline. So last-minute electronic filers may still have to make a mad dash to the post office to get their checks in the mail.

Both Gulbransen and Tom Linafelt, spokesman for H&R Block, estimated that it takes about 90 minutes to complete an average return, meaning true procrastinators will want to get started before Jay Leno's monologue.

"Completing your return online is a lot faster than paper, but it's still not a good idea to wait until 11:45 that night," Gulbransen said.

Both H&R Block and Intuit have reported that online tax preparation is up this year. The latest figures from Intuit, as of March 11, tallied more than 2 million returns filed using the TurboTax for the Web service, an increase of 40 percent from the same period a year ago. H&R Block counted 949,000 returns completed online as of March 15, an increase of more than 14 percent from a year ago.

IRS statistics count more than 35 million returns filed by computer as of April 5, a 17 percent increase from the same period last year. The agency is in the midst of a multi-pronged push to expand e-filing.

For those who just can't get it together by the deadline, Intuit, H&R Block and the IRS all offer forms, services and advice for requesting an extension.