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1
Taxpayers, Trends, and the World Wide Web
Larry WolfeSenior Vice PresidentIntuit Inc.
2
Agenda
Waves of Technology Will Taxpayers Adopt? Roles Taming the Paper Tigers Public/Private Partnership Looking Forward
3
The Creation of Empires
Internal Combustion Engine
Semiconductor
Internet
Auto industry Oil industry Fast food industry
Consumer electronics Enterprise software industry PC industry
Electronic Finance Many more to come . . .
4
Internet Impact: There are waves…and then there is a tsunami
0
30
60
90
120
‘22 ‘30 ‘38 ‘46 ‘54 ‘62 ‘70 ‘78 ‘86 ‘94 ‘02
Use
rs (M
illio
ns)
Radio TVCable Internet
Source: Morgan Stanley.
Years to reach 50 million users
38 13 10 5
5Source: Morgan Stanley Equity Research
Insurance & Fin Srvcs
Computer Soft/Hardware
Collectibles
Music/Video
Books
Flowers/Gifts
Consumer Electronics/Appliances
Office Products
General Sporting Goods
Tools/Home Repair
Home Furnishings
Cigars (it’s a 90s thing…)
Internet Opportunities for Various Product and Service Categories
Co
nsu
mer
Co
mfo
rt w
ith
Bu
yin
g O
nlin
eC
on
sum
er C
om
fort
wit
h B
uyi
ng
On
line
Internet Business OpportunityInternet Business Opportunity
6
Waves of Technology
InstitutionInstitution Enterprise Computing
Automate the Back Office
CitizenCitizen Personal Computing
Automate the Customer
Connected Computing
Automate the Communication
7
InstitutionsBusinesses
The Paper Chase
Consumers
8
Phase One: the Computer
Businesses Institutions
Consumers
9
Phase Two: the Internet
Businesses Institutions
Consumers
10
Electronic Finance of the Future Will Be:
Connected
Interconnected
Delivered via the Net
Interconnecting key partsof the financial picture
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
Taxpayer Voluntary compliance
Return self prepared Return professionally prepared
Files tax returnElectronic, mail, telephone
Pays any tax dueVia paper or electronically
Technology Shifts:
Paper to PC to Internet
Recent growth of e-file
Paper to e-pay
14
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
Gathers data from taxpayer
Calculate, review return Access to tax help and
publications Tools for filing return Provide tax advice Provide support
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.
Citizen
Citizen
BusinessesGovernment
FinancialInstitutions
Technology
The Old Days
The New Days
17
Public/Private Partnerships
Government and Industry working together in Public/Private Partnership Cooperation, not competition
Common goals Mutual Commitment
18
The Consumer Finance World
Banking Taxes
Mortgages
Investments
Bills
FinancialInformation/News
K
Insurance
19
Banking
Mortgages
Investments
Bills
FinancialInformation/News
The Electronic Consumer Finance World
Taxes
Insurance
20
The Income Tax Process
Checkbook
Taxpayer
IRS
States
Banks
Tax Preparer
Mutual FundsBrokerage House
Employers
21
The Electronic Income Tax Process
TaxpayerIRS
States
Banks
Employers
Mutual FundsBrokerage House
ServerWebTurboTax
Tax Preparer
E-file Server
22
Electronic Returns Filed
0
500
1,000
1,500
2,000
TY94 TY95 TY96 TY97 TY98
Retu
rns
(00
0)
23
Electronic Returns Filed
24
The Small Business World
Small Business States
Customers
Suppliers
Bank
DistributionChannel
U.S. Gov’t
Employees
Accountants
25
States
Customers
Suppliers
Bank
DistributionChannel
U.S. Gov’t
Employees
Accountants
The Electronic Small Business World
Small Business
Small Business
26
Lower costTaxpayer and government
Real-time information Instant record updates Zero data entry, improved accuracy
Taxpayer and government Taxpayer controls finances easily
Individual or business
Why Interconnected Finance?
Benefit
BenefitBenefitBenefit
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-knowledgebaseAccount 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 productsCompetition results in lower pricesMore returns are e-prepared and e-filed
32
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
Public/Private Partnership