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Taxpayers Plugging In and Logging On

  |  April 17, 2000   |  Comments

The number of people who filed their taxes electronically has increased dramatically, almost 30 percent in the past year, and more people are using the Web to find the IRS.

The number of people who filed their taxes electronically has increased dramatically, almost 30 percent in the past year, according to International Data Corp. (IDC). One-third of these filers are first-time electronic filing users.

"There is no question that the promise of receiving a refund within two weeks is enticing many people to try electronic filing," said Gigi Wang, senior vice president of IDC's Communications and Internet research.

Unique Visitors to Tax-Related Sites
(in millions)
Site Unique Visitors
12/98 to 2/99
Unique Visitors
12/99 to 2/00
Percent
Change
IRS.gov 2,661 7,513 182%
TurboTax 1,888 4,193 122%
Taxcut.com 1,570 2,077 32%
Fedworld.gov 5,914 6,971 18%
UsTreas.gov 10,894 5,859 -46%
Total 22,927 27,588 20%
Source: Media Metrix

According to IDC, the majority of electronically filed returns are done by tax preparers, not individuals.

"There is an interesting dichotomy between individuals using tax preparers and those filing electronically themselves," Wang said. "Individuals who use a professional tax preparer generally have lower earnings than those individuals filing online themselves. This shows the success of special promotions targeted at this segment. Programs such as offering loans against an anticipated refund have enormous appeal."

In an effort to mainstream e-filing as an alternative to paper filing, the IRS turned to Web advertising this year to inform consumers. As a result of the ad campaign, Web traffic almost tripled, according to AdRelevance, a division of Media Metrix.

Although overall unique visitor traffic to tax-related Web sites is growing at a rate of 20 percent, IRS.gov has seen a phenomenal increase in unique visitors, with an estimated growth of 182 percent this year compared to last. On the other hand, the Department of Treasury site, the IRS.gov parent site, has seen a 46 percent increase in unique visitor traffic for the same time period.

"This data seems to suggest that people are beginning to access the IRS.gov site directly, instead of going through the Department of Treasury Web site," said Charlie Buchwalter, vice president of media research for AdRelevance.

In addition to providing taxpayers with a more intuitive Web address, some of this increase in traffic was driven by a strategic IRS online advertising program to generate awareness of the relatively simple e-filing process. The IRS campaign peaked in weekly impressions at roughly the same time as traffic to the IRS.gov Web site, early to mid-February. IRS.gov advertising impressions appeared primarily on Yahoo sites (58 percent), followed by Talk City (30 percent), and Bloomberg (12 percent).

"The decision to advertise on the Web suggests that the IRS is committed to building and marketing a better infrastructure to expedite the tax filing process," Buchwalter said. "Not only have they made it easier for people to find the site, but now they are proactively driving traffic to it."

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