Taxpayers, Trends and the Worldwide Web


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  • Currently we all are in the midst of the creation of a new empire, the Internet is the driving force behind it.
  • Phase One: Automate back-office functions, including accounting. Communication centered on the use of paper. Phase Two: Automate the Record-keeping, at the end-user level. Phase Three: The Internet automates the Communication
  • Discuss our high fixed costs, $50MM in development to create and support tax engineering/development. Discuss requirement to scale for peaks and necessity to e able to respond quickly to both the annual tax cycle we all work under as well as the ability to respond quickly within a tax season (I.e. we added capacity this year just to support April filers.)
  • Wave 1: provide a few statistics of Intuit desktop software penetration Wave 2: Adoption indicators for Web based software include credit card usage, financial data and activity on the Net. Current estimates are that 69 million taxpayers have access to the Internet, with an estimated 1 billion taxpayers having access by the year 2007.
  • Goal for this slide is to discuss how technology has changed how taxpayers fulfill their role and to nicely point out the voluntary compliance point.
  • Goals for this slide are to lump preparers and software providers in same boat insofar as we both make a living providing tax prep services to taxpayers. Tools for filing return are e-file, PC, print for mailing Software industry creates tools for both taxpayer and tax preparers Larry: do you want to say “Provide tax advice” under software industry column?
  • Goal for this slide is to support gov’t need to take advantage of the internet for their functions w/o supporting their need to provide tax prep.
  • Technology is the underlying fabric that weaves together partnerships in the “new days.”
  • Common goals include desire to help taxpayers and tax preparers prepare and file all returns electronically. We need to work together to make this happen. For example, tax preparers will not get there without both revenue agencies making it simpler for them to provide all tax services electronically and for software industry to make it easy for them to do so.
  • Intuit e-file volume grew 340% this year alone.
  • Volume will continue to grow exponentially as we work together to eliminate barriers and provide incentives for e-preparation and e-file services.
  • Holds true for small. Businesses too.
  • Note last point re: voluntary compliance/taxpayer control. Also note benefits for gov’t too.
  • Wouldn’t spend too much time on e-file but thought important to include as part of the future.
  • I promised FTA we wouldn’t hit QTFP too hard in your presentation as I am speaking on it later and we have a hospitality suite later same day. Important point to make is partnership for awareness benefits all, especially taxpayer and government and that this is not just Intuit - no endorsement expectation. First Year Successes Over 86,000 federal returns prepared Over 70,000 federal returns e-filed Over 57,000 state returns prepared Over 35,000 state returns e-filed Media coverage received in 1,604 outlets AP Photo, broadcast news, print, and radio 95% positive coverage, remainder neutral Over 33 million impressions nationwide
  • Taxpayers, Trends and the Worldwide Web

    1. 1. Taxpayers, Trends, and the World Wide Web Larry Wolfe Senior Vice President Intuit Inc.
    2. 2. Agenda <ul><li>Waves of Technology </li></ul><ul><li>Will Taxpayers Adopt? </li></ul><ul><li>Roles </li></ul><ul><li>Taming the Paper Tigers </li></ul><ul><li>Public/Private Partnership </li></ul><ul><li>Looking Forward </li></ul>
    3. 3. The Creation of Empires <ul><li>Auto industry </li></ul><ul><li>Oil industry </li></ul><ul><li>Fast food industry </li></ul><ul><li>Consumer electronics </li></ul><ul><li>Enterprise software industry </li></ul><ul><li>PC industry </li></ul><ul><li>Electronic Finance </li></ul><ul><li>Many more to come . . . </li></ul>Internal Combustion Engine Semiconductor Internet
    4. 4. Internet Impact: There are waves… and then there is a tsunami Source: Morgan Stanley. Years to reach 50 million users 38 13 10 5 0 30 60 90 120 ‘ 22 ‘ 30 ‘ 38 ‘ 46 ‘ 54 ‘ 62 ‘ 70 ‘ 78 ‘ 86 ‘ 94 ‘ 02 Users (Millions) Radio TV Cable Internet
    5. 5. Source: 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 Consumer Comfort with Buying Online Internet Business Opportunity
    6. 6. Waves of Technology Institution Enterprise Computing Automate the Back Office Citizen Personal Computing Automate the Customer Connected Computing Automate the Communication
    7. 7. The Paper Chase Institutions Businesses Consumers
    8. 8. Phase One: the Computer Businesses Institutions Consumers
    9. 9. Phase Two: the Internet Businesses Institutions Consumers
    10. 10. Electronic Finance of the Future Will Be: Meaning Meaning Goal…save time, save money Connected Interconnected Delivered via the Net Interconnecting key parts of the financial picture
    11. 11. Internet Trends <ul><li>Consolidating Force </li></ul><ul><ul><li>Search / News / Sports / Books </li></ul></ul><ul><li>High Fixed / Low Variable Costs </li></ul><ul><ul><li>Volume Players Win </li></ul></ul><ul><li>Requirements </li></ul><ul><ul><li>Size (Relative Scale) </li></ul></ul><ul><ul><li>Speed (Time to Market) </li></ul></ul>
    12. 12. Will Taxpayers Adopt? <ul><li>Wave 1: Desktop Software </li></ul><ul><ul><li>Personal finance </li></ul></ul><ul><ul><li>Tax preparation </li></ul></ul><ul><ul><li>Small Business </li></ul></ul><ul><li>Wave 2: Web-based Software </li></ul><ul><ul><li>Credit Card Usage on the Net </li></ul></ul><ul><ul><li>Financial Data on the Net </li></ul></ul><ul><ul><li>Financial Activity on the Net </li></ul></ul><ul><li>Access and Means </li></ul>
    13. 13. Roles <ul><li>Taxpayer </li></ul><ul><ul><li>Voluntary compliance </li></ul></ul><ul><ul><ul><li>Return self prepared </li></ul></ul></ul><ul><ul><ul><li>Return professionally prepared </li></ul></ul></ul><ul><ul><li>Files tax return </li></ul></ul><ul><ul><ul><li>Electronic, mail, telephone </li></ul></ul></ul><ul><ul><li>Pays any tax due </li></ul></ul><ul><ul><ul><li>Via paper or electronically </li></ul></ul></ul><ul><li>Technology Shifts: </li></ul><ul><li>Paper to PC to Internet </li></ul><ul><li>Recent growth of e-file </li></ul><ul><li>Paper to e-pay </li></ul>
    14. 14. Roles <ul><li>Professional Preparers </li></ul><ul><ul><li>Gathers data from taxpayer </li></ul></ul><ul><ul><li>Prepare tax return for taxpayer </li></ul></ul><ul><ul><li>File tax return </li></ul></ul><ul><ul><li>Provide tax advice </li></ul></ul><ul><ul><li>Provide support </li></ul></ul><ul><li>Software Industry </li></ul><ul><ul><li>Technology investment & innovation </li></ul></ul><ul><ul><li>Tax preparation tools </li></ul></ul><ul><ul><ul><li>Gathers data from taxpayer </li></ul></ul></ul><ul><ul><ul><li>Calculate, review return </li></ul></ul></ul><ul><ul><ul><li>Access to tax help and publications </li></ul></ul></ul><ul><ul><ul><li>Tools for filing return </li></ul></ul></ul><ul><ul><ul><li>Provide tax advice </li></ul></ul></ul><ul><ul><ul><li>Provide support </li></ul></ul></ul><ul><li>Technology Shifts: </li></ul><ul><li>Service Bureaus to desktop to Internet </li></ul>
    15. 15. Roles <ul><li>Government </li></ul><ul><ul><li>Collect revenues for public treasury </li></ul></ul><ul><ul><li>Develop and oversee tax regulations </li></ul></ul><ul><ul><li>Audit and enforcement </li></ul></ul><ul><ul><li>Provide information and services to citizens </li></ul></ul><ul><li>Technology Shifts: </li></ul><ul><li>Paper and Telephone to Electronic Information Services over the Internet </li></ul>
    16. 16. How Will This Succeed? Partnering. Citizen Citizen Businesses Government Financial Institutions Technology The Old Days The New Days
    17. 17. Public/Private Partnerships <ul><li>Government and Industry working together in Public/Private Partnership </li></ul><ul><ul><li>Cooperation, not competition </li></ul></ul><ul><li>Common goals </li></ul><ul><li>Mutual Commitment </li></ul>
    18. 18. The Consumer Finance World Banking Taxes Mortgages Investments Bills Financial Information/News K Insurance
    19. 19. The Electronic Consumer Finance World Banking Mortgages Investments Bills Financial Information/News Taxes Insurance
    20. 20. The Income Tax Process Taxpayer IRS States Tax Preparer Employers Checkbook Banks Mutual Funds Brokerage House
    21. 21. The Electronic Income Tax Process Taxpayer IRS States Employers Server WebTurboTax Tax Preparer E-file Server Banks Mutual Funds Brokerage House
    22. 22. Electronic Returns Filed Returns (000) TY94 TY95 TY96 TY97 TY98
    23. 23. Electronic Returns Filed
    24. 24. The Small Business World Small Business States Customers Suppliers Bank Distribution Channel U.S. Gov’t Employees Accountants
    25. 25. States Customers Suppliers Bank Distribution Channel U.S. Gov’t Employees Accountants The Electronic Small Business World Small Business Small Business
    26. 26. <ul><ul><li>Lower cost </li></ul></ul><ul><ul><ul><li>Taxpayer and government </li></ul></ul></ul><ul><ul><li>Real-time information </li></ul></ul><ul><ul><li>Instant record updates </li></ul></ul><ul><ul><li>Zero data entry, improved accuracy </li></ul></ul><ul><ul><ul><li>Taxpayer and government </li></ul></ul></ul><ul><ul><li>Taxpayer controls finances easily </li></ul></ul><ul><ul><ul><li>Individual or business </li></ul></ul></ul>Why Interconnected Finance? Benefit Benefit Benefit Benefit Benefit
    27. 27. Getting to E-File Goals <ul><li>Eliminate ALL barriers </li></ul><ul><ul><li>Allow all returns to be e-filed </li></ul></ul><ul><ul><li>Eliminate all paper requirements </li></ul></ul><ul><ul><li>Enable electronic payments (debit & credit) </li></ul></ul><ul><ul><li>Squash the perception of higher audit risk </li></ul></ul><ul><ul><li>Implement electronic postmarks </li></ul></ul><ul><ul><li>Simplify ERO signup process </li></ul></ul><ul><ul><ul><li>Simplify application process </li></ul></ul></ul><ul><ul><ul><li>Treat all preparers equally </li></ul></ul></ul><ul><ul><li>Be careful about digital signatures </li></ul></ul>
    28. 28. Getting to E-File Goals <ul><li>Provide incentives for taxpayers and tax preparers </li></ul><ul><ul><li>Warehouse electronic payments </li></ul></ul><ul><ul><ul><li>Preferably until after April 15 </li></ul></ul></ul><ul><ul><li>Provide online customer service </li></ul></ul><ul><ul><li>Reduce audit period for e-filed returns </li></ul></ul><ul><ul><li>Enable electronic correspondence </li></ul></ul><ul><ul><li>Allow direct account access and enhanced status information </li></ul></ul><ul><ul><li>Don’t speed up paper processing </li></ul></ul>
    29. 29. Where Is Industry Today? <ul><li>As a result of innovation and competition, private industry has: </li></ul><ul><ul><li>12 million individuals using tax software </li></ul></ul><ul><ul><li>200,000+ professionals using tax software </li></ul></ul><ul><ul><li>Made tax preparation easier and faster </li></ul></ul><ul><ul><li>Reduced the costs of tax preparation </li></ul></ul><ul><ul><li>Simplified e-filing </li></ul></ul><ul><ul><li>Started to make automated tax returns real </li></ul></ul>
    30. 30. Where Is Government Today? <ul><li>Technology is enabling development of </li></ul><ul><ul><li>On-line information services for citizens </li></ul></ul><ul><ul><li>On-line customer service capabilities </li></ul></ul><ul><ul><ul><li>Web-knowledgebase </li></ul></ul></ul><ul><ul><ul><li>Account information </li></ul></ul></ul><ul><ul><li>On-line forms and publications </li></ul></ul><ul><ul><li>Open model for electronic filing </li></ul></ul><ul><ul><li>A host of internal services </li></ul></ul><ul><ul><ul><li>(e.g., audit and compliance) </li></ul></ul></ul>
    31. 31. Where Should We Be Going? <ul><li>Public/Private partnerships </li></ul><ul><ul><li>Industry can and will innovate </li></ul></ul><ul><ul><li>Government can and should facilitate </li></ul></ul><ul><li>End result…..everybody wins </li></ul><ul><ul><li>Taxpayers, Government, and Industry </li></ul></ul><ul><ul><ul><li>Competition results in better products </li></ul></ul></ul><ul><ul><ul><li>Competition results in lower prices </li></ul></ul></ul><ul><ul><ul><li>More returns are e-prepared and e-filed </li></ul></ul></ul>
    32. 32. <ul><li>Example: Quicken Tax Freedom Project </li></ul><ul><ul><li>Donated Web-based tax preparation and e-file services </li></ul></ul><ul><ul><li>No charge to taxpayer or government </li></ul></ul><ul><li>Partnership Recommendations: </li></ul><ul><ul><li>Public Awareness and Education Campaigns </li></ul></ul><ul><ul><li>Agencies educating taxpayers about no-charge preparation and e-file services </li></ul></ul><ul><ul><li>Reference all providers of services </li></ul></ul>Public/Private Partnership