Kansas City, Mo. When H&R; Block started filing electronic tax returns in 1986, it was an experiment, and no one was sure how well it would work.
Now the Kansas City-based tax-preparation giant files 85 percent of its returns electronically. Nationwide, 44 percent of all returns are filed that way, and the percentage of individuals who filed electronically has jumped 36 percent compared with this time last year.
"It's sort of becoming the thing to do," said Neil Getzlow, a Block spokesman.
Most Block offices offer electronic filing for free. They're getting competition from many independent tax preparers, who also file electronically, and even the do-it-yourself software makers who provide electronic filing for the people who buy their programs.
The IRS is aiming to receive 80 percent of all tax returns electronically by 2007.
The IRS likes electronic filing because it cuts down on the paperwork associated with processing the 130 million tax returns it expects to get this year. E-filing also makes it easier for IRS officials to check returns for accuracy.
Many taxpayers like electronic filing because they get refunds quicker. And tax professionals say the built-in error detection makes electronic returns less likely to be audited than paper returns.
Cindy Hockenberry of the National Association of Tax Practitioners says electronic filing is more secure, too.
"You mail things, and God only knows where they'll end up," she said.
Not everyone is so enthused. Hockenberry said nearly all the association's nearly 15,000 members file electronically, but there are "a few out there that still insist on doing it all by hand, on paper. They don't even use a computer."
Taxpayers who file electronically still have to mail a signed form. But even that is changing this year. Taxpayers can set up a personal identification number that the IRS will treat like a signature, and file their taxes without ever mailing a single piece of paper.
Block is offering the paperless filing this year. Getzlow says it's too soon to know whether it will take off the way electronic filing has.