IRS plans ad blitz for e-file

The Internal Revenue Service is planning to spend millions of dollars on a media and advertising campaign to promote its customer-friendly services and persuade more taxpayers to file their tax returns online.

In a request for proposals released Dec. 17, the agency announced that it is seeking a partnership with a communications and marketing agency to spread the word about the IRS. Proposals for a one-year base and four additional years are due Feb. 8.

The five-year project is estimated to be worth $80 million to $100 million, and IRS officials hope to launch it early next year. One of the major goals is marketing the IRS e-file program to encourage more taxpayers to file their returns electronically. The IRS has set 2007 as a target for getting 80 percent of all tax returns filed electronically but has been falling behind in that goal.

Last year, 40 million Americans filed their tax returns electronically, 2 million short of the IRS goal. This year, the IRS had set a target of 46 million electronic tax returns and expects to possibly surpass that goal because an increasing number of taxpayers may turn to electronic filing as a result of the anthrax mail scares.

The IRS plans to use the media company for both internal and external marketing, media research and direct marketing. Much of the advertising is expected to be done via public service ads because the IRS is allowed by Congress to use appropriated funds only to advertise e-filing.

Pete Sepp, who represents the National Taxpayers Union, a consumer group often critical of the IRS, said the agency's plans are a waste of taxpayer dollars.

"That's $100 million that could go to much more important priorities...like improving the plain-English content of instruction forms," Sepp said. "I just hope they don't come up with [the] message, 'We're from the IRS, and we're here to help you.'"

Nevertheless, an advertising agency may not have a tough job at hand. The IRS is slowly gaining in popularity, especially among those who file their taxes electronically, according to the American Customer Satisfaction Index of federal government services released Dec. 17.

In the annual report on how satisfied Americans are with federal government agencies, the index shows that the score for the IRS has improved 11 percent from last year and 22 percent since 1999. Claes Fornell, director of the University of Michigan Business School's National Quality Research Center, which compiles and analyzes the index data, said that high satisfaction among individuals filing tax returns electronically is a major reason for the IRS' rising score.