So maybe filing state taxes will never be painless – but now, especially if you embrace the speed and convenience of the Internet, the process can seem a whole lot simpler.
Nationtax, the first and right now only Web-based business tax-filing network, has added Rhode Island to its stable of U.S. states that now allow businesses to prepare, file and pay Rhode Island sales and use taxes online.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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With speed, accuracy, simplicity and safety their major selling points, company officials were in town this month “to raise awareness” about the Nationtax service, said Rhonda Jung, Nationtax public relations manager.
Their timing is perfect, she said, citing the Internal Revenue Service’s record success in getting nearly 30 million personal income tax returns for 1999 filed electronically, up 27 percent from the year before. (The IRS goal is that by 2007, 80 percent of all tax returns will be electronically filed – electronic filings include those called in by telephone.)
Still, it’s taken a while for states to jump aboard the wave of Internet business tax filing, although the R.I. Division of Taxation, which signed on with Nationtax last fall, was “one of the very first to embrace the service,” Jung said.
Rhode Island, with about 35,000 corporate tax filers, is now one of eight states where Nationtax is “live,” along with Hawaii, Idaho, Louisiana, Florida, Pennsylvania, Delaware and 90 localities in Alabama (where Nationtax is based). The company is also in development with about 30 others, and expects to have 40 states signed on by the end of this year, including Connecticut, Massachusetts and Vermont.
Originally Nationtax officials thought it’d be the small business, which often lacks the resources for expensive tax filing software and hiring out administrative services, to be the first to take to the service – especially since many businesses have to file taxes not once but several times a year.
But larger companies are also seeing its benefits, Jung said, especially companies who do business across state lines and have to deal with a morass of different forms and systems, which makes it “increasingly likely” they’re going to make an error along the way.
Nationtax can be accessed through the Division of Taxation Web site at www.tax.-state.ri.us/ or www.Nationtax.com All that’s required is an Internet connection and a Web browser. The cost of the service is $3.95 per transaction, but it costs nothing to register and there is no software to buy.
If it sounds like a lot, consider the costs of doing it on paper, said the company’s public relations consultant Randi J. Baylis, in time, postage, certified mail fees, etc. And because it’s online, there is E-mail confirmation with the Nationtax system, so “you know it got there.”
Nationtax also sends out “e-minders” so business owners won’t miss a tax-filing deadline, Jung said, and safety wise they’ve gone to great lengths, including the use of confidential passwords and IDs, the Secure Socket Layer (SSL) 128-bit encryption and the VeriSign Secure Server Digital ID system. “It’s a major priority, [and] we’re absolutely confident we’re providing the highest, most secure system available,” Jung said. “Our security is comparable if not greater than many of the greater financial systems.”
Upon connecting to the Nationtax Web site, there is a brief registration process where users log in and select the tax they need to remit and fill in their filing information. Nationtax automatically transmits the tax return and payment, if applicable, to the proper tax authority, with the payment deducted directly from the user’s bank account. Part of Nationtax’s service is to keep abreast of the latest tax rates across the country, which is “no small task,” since sales tax rates alone can change as many as 600 times annually, Jung said.
Go with the flow
Nationtax, now with a little over 100 employees and based in Birmingham, has a 20-year history processing business tax forms in Alabama, doing business as the Internet service Nationtax for just about a year. They have some 30 Rhode Island business filers right now, and this month began a test marketing campaign that will run through August.
As comfort levels with the Internet steadily increase -42 percent of all small businesses now have a computer and are online with expectations that by 2003 it will reach 70 percent – Jung sees nothing but success ahead for Nationtax, and the similar companies that will inevitably spring up around them.
When they first started, they did a lot of knocking on doors and explaining themselves. Now “more and more states [are] coming to us,” Jung said. And although some states have developed their own Web-filing systems at a cost to taxpayers, states are increasingly “seeing the advantage of working with private companies” in this regard. “This is paid for by the people actually using the service,” most of whom, once they try it, can’t believe “what a relief” it is.
Delaware officials estimate it costs $5 to $7 to process a paper form while electronically it “costs them a couple of cents,” Jung said. In California, state officials estimate it costs $25 to $30 per tax form to go back and reprocess for mistakes, and this is all money states can save to use in other ways.
R. Gary Clark, tax administrator for the R.I. Division of Taxation, said last week that although he didn’t have exact figures on cost benefits Internet tax filing represents to the division, “we know that it’s definitely a savings.”
For one thing, Internet business tax filing eliminates the two or three days it takes a return to arrive by mail, be received and “slit open,” reconciled, data entered into the system and the check delivered to the bank. “With this”[the process is] virtually instantaneous,” and not just the information, Clark said. “We have all this money available a lot quicker” as well – which in Rhode Island sales tax alone is about $680 million in any given year.
Actually, businesses in Rhode Island have been able to pay sales and use, withholding tax and corporate taxes electronically using Electronic Funds Transfer for several years, Clark said. For example, of the $500 million the state collects in a year of withholding taxes, about $456 million or 90 percent is now filed electronically. Payroll taxes are also commonly filed this way and about $25 million a month (or about $300 million a year) of Rhode Island’s sales tax is also already filed electronically.
So “doing business with Nationtax is just another way of doing that,” Clark said. “We’re working to get more and more businesses [online] because it’s so much easier for us” – although pen and paper, envelopes and stamps are okay, too. “We’re still here to receive it anyway they want to send it to us,” Clark said. “It all flows smoothly.”
For more information, call the R.I. Division of Taxation at 222-6282 or Nationtax at 1-888-776-2921.
