Taxpayers, Trends,
and the
World Wide Web
Larry Wolfe
Senior Vice President
Intuit Inc.
1
Agenda
 Waves of Technology
 Will Taxpayers Adopt?
 Roles
 Taming the Paper Tigers
 Public/Private Partnership
 Looking Forward
2
The Creation of Empires
Internal
Combustion
Engine
Semiconductor
 Auto industry
 Oil industry
 Fast food industry
 Consumer electronics
 Enterprise software
industry
 PC industry
Internet
 Electronic Finance
 Many more to come . . .
3
Internet Impact: There are waves…
and then there is a tsunami
Users (Millions)
Years to reach 50 million users
120
90
38
60
30
0
Radio
‘22
‘30
13
Cable
TV
‘38
Source: Morgan Stanley.
‘46
‘54
‘62
10
‘70
‘78
5
Internet
‘86
‘94 ‘02
4
Internet Opportunities for Various
Product and Service Categories
Consumer Comfort with Buying Online
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…)
Internet Business Opportunity
Source: Morgan Stanley Equity Research
5
Waves of Technology
Institution



Enterprise Computing
Automate the Back Office
Connected Computing
Citizen
Automate the Communication
Personal Computing
Automate the Customer
6
The Paper Chase
Institutions
Businesses
Consumers
7
Phase One: the Computer
Institutions
Businesses
Consumers
8
Phase Two: the Internet
Institutions
Businesses
Consumers
9
Electronic Finance of the
Future Will Be:
Connected
Meaning
Interconnected Meaning
Delivered via the Net
Interconnecting key parts
of the financial picture
Goal…save time, save money
10
Internet Trends
 Consolidating Force
 Search / News / Sports / Books
 High Fixed / Low Variable Costs
 Volume Players Win
 Requirements
 Size (Relative Scale)
 Speed (Time to Market)
11
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
12
Roles
 Taxpayer
 Voluntary compliance


Return self prepared
Return professionally prepared
 Files tax return
Electronic, mail, telephone
 Pays any tax due
 Via paper or electronically

Technology Shifts:
 Paper to PC to
Internet
 Recent growth
of e-file
 Paper to e-pay
13
Roles
 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
Technology Shifts:
 Service Bureaus to desktop
to Internet






Gathers data from
taxpayer
Calculate, review
return
Access to tax help and
publications
Tools for filing return
Provide tax advice
Provide support
14
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
15
How Will This Succeed?
Partnering.
Financial
Institutions
Technology
Government
Businesses
The New Days
Citizen
The Old Days
Citizen
16
Public/Private Partnerships
 Government and Industry working together
in Public/Private Partnership
 Cooperation, not competition
 Common goals
 Mutual Commitment
17
The Consumer Finance World
Banking
Taxes
Insurance
Investments
Financial
Information/News
Bills
Mortgages
18
The Electronic Consumer
Finance World
Banking
Taxes
Insurance
Investments
Financial
Information/News
Bills
Mortgages
19
The Income Tax Process
Banks
Taxpayer
IRS
Mutual Funds
Brokerage House
Employers
States
Tax Preparer
Checkbook
20
The Electronic Income Tax
Process
E-file Server
Server
WebTurboTax
Banks
Taxpayer
Mutual Funds
Brokerage House
IRS
Employers
States
Tax Preparer
21
Electronic Returns Filed
Returns (000)
2,000
1,500
1,000
500
0
TY94
TY95
TY96
TY97
TY98
22
Electronic Returns Filed
23
The Small Business World
U.S. Gov’t
Bank
Small Business
States
Accountants
Customers
Distribution
Channel
Suppliers
Employees
24
The Electronic Small Business
World
U.S. Gov’t
Bank
Small Business
States
Accountants
Customers
Distribution
Channel
Suppliers
Employees
Small Business 25
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
26
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
27
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
28
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
29
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)
30
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
31
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
32