States then pick up their data from the IRS through various technical means. Tax preparation service. The filer hires a registered provider to both prepare the tax forms and send them electronically. The preparer files directly to the government via modem, using government-registered software from its own or another company. The filer downloads free software from a state Web page or buys state-certified software, enters data and transmits it directly to a state phone circuit via modem.
Packages are typically free for individual filers.
Some specialized business filing software must be bought from registered software manufacturers, but businesses file directly with the state. The filer enters tax data into fields on a Web page and transmits it directly to a state via the Web. Data is encrypted for Internet transmission. Taxpayers who file electronically benefit from quicker refunds, and the government saves money, said Tim Blevins, chief information officer for the Kansas Revenue Department. Electronic filing saves time and cuts the costs of implementing and maintaining the monolithic tax imaging systems some states have set up, he said.