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Survey: Taxpayers aren't rushing online

Jupiter Media Metrix says people aren't as jazzed about filing their taxes online as they were predicted to be. But the IRS and tax-preparation sites say their numbers tell a different story.

Fewer people will use Web sites to prepare their taxes than once thought, according to a Jupiter Media Metrix survey released Wednesday.

The number of U.S. taxpayers who say they intend to use Internet tax-preparation sites such as Intuit's or H&R Block's has barely grown from last year, the study said. Jupiter said it randomly selected 1,961 online consumers for the survey, conducted last month.

"Online tax preparation has failed to develop as a significant alternative to software-based and professional tax preparation methods," Jupiter said in a statement.

Because professionals are using the online tax forms, however, the numbers are actually going up, according to the Internal Revenue Service. As of Feb. 15, the IRS reported that more than 21 million taxpayers had filed returns electronically, an 8.2 percent increase from the same period a year ago.

The IRS says the numbers are up in part because of anxiety over tax laws and the lure of bigger refunds.

Jupiter said its findings reflect the fact that many people don't realize their tax preparer files electronically.

The Jupiter survey found that about 5.1 percent of the respondents used Intuit's TurboTax for the Web last year, and the same percent plan to use it this year. Less than 1 percent used the "Do-It-Yourself Online" plan offered by H&R Block's Internet arm last year, and 1 percent said they planned to use it this year.

At the same time, Internet users who intend to let a professional tax preparer handle their taxes grew by 2.6 percent, Jupiter said.

As recently as a year ago, industry watchers projected that taxpayers would jump to the Web to do their taxes. The automated systems were supposed to make it faster, simpler and cheaper for the public to fill out their tax forms.

In reality, the sites have been known to buckle or become bogged down under heavy traffic, and customer service has been spotty.

"While the Web is a letdown as a preparation vehicle, it is showing potential as a preparation resource," said Robert Sterling, Jupiter senior analyst. "Media Metrix data show significant traffic growth and depth of use at the major tax sites."

Jupiter advises Web tax-preparation providers to focus their efforts and money on developing tools for the professional preparation sector.

Flying in the face of Jupiter's report, software maker Intuit said last month that it reached the millionth-customer milestone earlier this year than it did last year.