IRS tuning up e-file message

The Internal Revenue Service is turning to Madison Avenue for help in convincing taxpayers that it is safe to file their income taxes online.

Although the IRS hoped to get at least 40 million tax returns filed electronically this year, it fell short of its goal because citizens worried that the system was not secure, according to Terry Lutes, head of the IRS' Electronic Tax Administration.

Lutes said he plans to meet next week in New York City with ad agency executives, who will present ideas for attracting online filers in greater numbers.

Security is a "make or break issue" for taxpayer confidence, he told the spring meeting of the Council for Electronic Revenue Communication Advancement in Arlington, Va., Thursday.

Taxpayers also were skeptical of filing online because of obstacles in selecting their own personal identification number, which is used like a legal signature. Some taxpayers had problems even getting a PIN because they had to remember their 2000 tax information to verify their identity.

Despite the problems, Lutes said, "This was by far the smoothest year we've had."

As of May 7, Lutes said 39.7 million taxpayers had filed their income tax returns electronically, an increase from about 35 million for the entire 2000 tax season. He expects the number will reach 40 million by the end of the year.

"We got the easy 40 million. Maybe the other 80 million people out there are those who don't think they'll ever do anything on the Internet," Lutes told the gathering.

The IRS has a 2007 deadline of 80 percent of all returns being filed electronically. IRS Commissioner Charles Rossotti recently told Congress that the goal will be tough to meet, and will require the number of electronic returns to increase by 20 percent for the next seven years.