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Taxpayers, Trends, and the World Wide Web

Explore the impact of internet trends on taxpayer adoption in the financial technology sector. Learn about roles, technology shifts, and the shift from paper to electronic finance for individuals and businesses.

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Taxpayers, Trends, and the World Wide Web

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  1. Taxpayers, Trends, and the World Wide Web Larry Wolfe Senior Vice President Intuit Inc.

  2. Agenda • Waves of Technology • Will Taxpayers Adopt? • Roles • Taming the Paper Tigers • Public/Private Partnership • Looking Forward

  3. Auto industry Oil industry Fast food industry Internal Combustion Engine Semiconductor Internet The Creation of Empires • Consumer electronics • Enterprise software industry • PC industry • Electronic Finance • Many more to come . . .

  4. 120 90 Users (Millions) 60 Cable Radio Internet 30 TV 0 ‘22 ‘30 ‘38 ‘46 ‘54 ‘62 ‘70 ‘78 ‘86 ‘94 ‘02 Internet Impact: There are waves…and then there is a tsunami Years to reach 50 million users 5 38 13 10 Source: Morgan Stanley.

  5. Consumer Comfort with Buying Online Internet Business Opportunity Internet Opportunities for Various Product and Service Categories Insurance & Fin Srvcs Computer Soft/Hardware Books Music/Video Flowers/Gifts Office Products Consumer Electronics/Appliances Collectibles General Sporting Goods Tools/Home Repair Home Furnishings Cigars (it’s a 90s thing…) Source: Morgan Stanley Equity Research

  6. Enterprise Computing Institution Automate the Back Office Connected Computing Automate the Communication Personal Computing Citizen Automate the Customer Waves of Technology

  7. Institutions Businesses Consumers The Paper Chase

  8. Phase One: the Computer Institutions Businesses Consumers

  9. Phase Two: the Internet Institutions Businesses Consumers

  10. Delivered via the Net Connected Interconnecting key parts of the financial picture Interconnected Electronic Finance of the Future Will Be: Meaning Meaning Goal…save time, save money

  11. Internet Trends • Consolidating Force • Search / News / Sports / Books • High Fixed / Low Variable Costs • Volume Players Win • Requirements • Size (Relative Scale) • Speed (Time to Market)

  12. Will Taxpayers Adopt? • Wave 1: Desktop Software • Personal finance • Tax preparation • Small Business • Wave 2: Web-based Software • Credit Card Usage on the Net • Financial Data on the Net • Financial Activity on the Net • Access and Means

  13. Roles Technology Shifts: • Paper to PC to Internet • Recent growth of e-file • Paper to e-pay • Taxpayer • Voluntary compliance • Return self prepared • Return professionally prepared • Files tax return • Electronic, mail, telephone • Pays any tax due • Via paper or electronically

  14. Professional Preparers Gathers data from taxpayer Prepare tax return for taxpayer File tax return Provide tax advice Provide support Software Industry Technology investment & innovation Tax preparation tools Gathers data from taxpayer Calculate, review return Access to tax help and publications Tools for filing return Provide tax advice Provide support Roles Technology Shifts: • Service Bureaus to desktop to Internet

  15. Roles • Government • Collect revenues for public treasury • Develop and oversee tax regulations • Audit and enforcement • Provide information and services to citizens • Technology Shifts: • Paper and Telephone to Electronic Information Services over the Internet

  16. How Will This Succeed? Partnering. Financial Institutions Technology Government Businesses Citizen Citizen The New Days The Old Days

  17. Public/Private Partnerships • Government and Industry working together in Public/Private Partnership • Cooperation, not competition • Common goals • Mutual Commitment

  18. Banking Taxes Insurance Investments K Financial Information/News Bills Mortgages The Consumer Finance World

  19. Banking Taxes Insurance Investments Financial Information/News Bills Mortgages The Electronic Consumer Finance World

  20. Banks Mutual Funds Brokerage House Checkbook The Income Tax Process Taxpayer IRS Employers States Tax Preparer

  21. Banks Mutual Funds Brokerage House The Electronic Income Tax Process E-file Server Server WebTurboTax Taxpayer IRS Employers States Tax Preparer

  22. TY94 TY95 TY96 TY97 TY98 Electronic Returns Filed Returns (000)

  23. Electronic Returns Filed

  24. The Small Business World U.S. Gov’t Bank States Small Business Accountants Customers DistributionChannel Suppliers Employees

  25. The Electronic Small Business World U.S. Gov’t Bank States Small Business Accountants Customers DistributionChannel Suppliers Employees Small Business

  26. Why Interconnected Finance? • Lower cost • Taxpayer and government • Real-time information • Instant record updates • Zero data entry, improved accuracy • Taxpayer and government • Taxpayer controls finances easily • Individual or business Benefit Benefit Benefit Benefit Benefit

  27. Getting to E-File Goals • Eliminate ALL barriers • Allow all returns to be e-filed • Eliminate all paper requirements • Enable electronic payments (debit & credit) • Squash the perception of higher audit risk • Implement electronic postmarks • Simplify ERO signup process • Simplify application process • Treat all preparers equally • Be careful about digital signatures

  28. Getting to E-File Goals • Provide incentives for taxpayers and tax preparers • Warehouse electronic payments • Preferably until after April 15 • Provide online customer service • Reduce audit period for e-filed returns • Enable electronic correspondence • Allow direct account access and enhanced status information • Don’t speed up paper processing

  29. Where Is Industry Today? • As a result of innovation and competition, private industry has: • 12 million individuals using tax software • 200,000+ professionals using tax software • Made tax preparation easier and faster • Reduced the costs of tax preparation • Simplified e-filing • Started to make automated tax returns real

  30. Where Is Government Today? • Technology is enabling development of • On-line information services for citizens • On-line customer service capabilities • Web-knowledgebase • Account information • On-line forms and publications • Open model for electronic filing • A host of internal services (e.g., audit and compliance)

  31. Where Should We Be Going? • Public/Private partnerships • Industry can and will innovate • Government can and should facilitate • End result…..everybody wins • Taxpayers, Government, and Industry • Competition results in better products • Competition results in lower prices • More returns are e-prepared and e-filed

  32. Public/Private Partnership • Example: Quicken Tax Freedom Project • Donated Web-based tax preparation and e-file services • No charge to taxpayer or government • Partnership Recommendations: • Public Awareness and Education Campaigns • Agencies educating taxpayers about no-charge preparation and e-file services • Reference all providers of services

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