Bush to seek e-file incentives

President Bush's 2003 budget will include two proposals to encourage taxpayers to file their returns online — making it free and extending the deadline past the dreaded April 15 cutoff, Treasury Department officials said Jan. 30.

A 10-day extension would take effect in 2003, and the White House is trying to work with the tax software industry over how to offer free electronic filing. The president's budget proposal is to be released Feb. 4.

"We need to reduce the burden on taxpayers in the short term by rapidly expanding opportunities such as e-filing and making it free to those who choose it," Treasury Secretary Paul O'Neill said. "No one should be forced to pay extra just to file his or her tax return."

IRS Commissioner Charles Rossotti said the agency would hold a forum to listen to industry leaders, which include such companies as Intuit Inc., maker of TurboTax software, and H&R Block, which markets TaxCut softwa

"The IRS is committed to working with the private sector to expand e-filing opportunities for taxpayers," Rossotti said.

But industry officials remained wary of any plan promoted by the government.

"An approach that is apparently under active consideration by some within the administration has less to do with electronic 'filing' than with electronic 'preparation' of tax returns," said Ed Black, president and chief executive officer of the Computer and Communications Industry Association. "The idea of IRS-prepared tax returns has properly met with widespread criticism."

Free tax preparation and filing already is available from some software companies for about 60 million Americans whose adjusted gross income is less than $25,000 per year.

The 10-day extension is designed to give e-filers the same "float" on their money as taxpayers who mail a check with their return. Currently, when the IRS receives an electronic tax return from a taxpayer, an electronic transfer is made immediately from a taxpayer's bank account.