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ReadyReturn Preliminary Report

Appendix A: Profiles
A-1 Invitees
A-2 Users
A-3 Non-Participants
A-4 Control Group
A-5 Profile Comparisons

A-1 – Invitees
ReadyReturn Information
The 51,850 ReadyReturns we mailed were “simple returns”. However, this does not mean that these
were necessarily the lowest-income taxpayers. The median adjusted gross income (AGI) for invited
taxpayers was $31,472. The largest AGI was $139,917.

Based on the tax returns we sent:


• 72.2% of invitees were owed a refund.
• 27.6% had a balance due.
• 00.2% had a zero balance.
• The median refund amount was $86, while the largest was $8,797.
• The median balance due amount was $95, while the largest was $9,291.

Chart A-1: Types of Returns Mailed

Types of Returns Mailed


Refund
72.2% Balance Due
27.6%

Zero Balance Due


00.2%

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ReadyReturn Preliminary Report

Demographics
We sent invitations to taxpayers throughout the state. The top five cities closely mirror the largest cities
in California:
Table A-1: Top 5 Cities (Invitees)

ReadyReturn Population
City
Rank Rank 1
Los Angeles 1 1
San Francisco 2 4
San Diego 3 2
Sacramento 4 7
San Jose 5 3

Taxpayers of all ages were invited to participate. The largest group of invited taxpayers was those
between the ages of 20 and 29 years old. The median age of taxpayers invited to participate in the
ReadyReturn pilot was 33 years old.

Chart A-2: Age Distribution (Invitees)

ReadyReturn Invitee Age Distribution


19,477
20,000 Median Age: 33

15,000
12,063

9,224
10,000 7,238

5,000
2,272
760 279 537
0
>20 20-29 30-39 40-49 50-59 60-69 70+ Unknown

1
Based on 2003 population data.
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ReadyReturn Preliminary Report

Filing History (Tax Year 2003)


Taxpayers invited to participate in the pilot historically used all of the various filing methods available for
California returns. Less than 40% chose an electronic method (e-file, TeleFile, and CalFile/NetFile)
while the rest filed on paper.

Chart A-3: Filing Method (Invitees)

How Invitees Filed Last Year

Electronic
36%

Paper
64%

Invitees filed their 2003 tax returns in similar time periods as California taxpayers on the whole, with
about 25% filing by mid-February. Forty-five percent of invitees filed their returns between April 1st and
the April 15th filing due date. Approximately 5% filed their returns after April 15th.

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ReadyReturn Preliminary Report

A-2 – Users
As of May 31, 2005, approximately 9,400 ReadyReturns were filed by mail and e-file. This is an 18%
response rate. More taxpayers (59%) chose to file their ReadyReturn online at our Website than chose
to file the paper return we mailed them.

Chart A-4: Returns Received by Method

ReadyReturns Received

Paper
41%

Online
59%

Return Information
Based on the ReadyReturns we received:

Table A-2: Return Characteristics (Users)

e-file Paper Total


Received a refund 81% 82% 81%
Median refund amount $ 88 $ 73 $ 83
Chose Direct Deposit of Refund 2 49% 16% 38%
Had a balance due 19% 8% 16%
Median balance due amount $ 77 $330 $ 98
Chose to pay electronically 3 53% N/A 53%
Median Adjusted Gross Income $35,241 $31,640 $33,998

Ninety-nine percent of taxpayers who used ReadyReturn used the “Single” filing status on their return.
One percent changed their filing status to married filing jointly, married filing separately, or head of
household. Significantly more taxpayers who used the Website made this change than the rest.

We expected taxpayers to make other changes, in addition to updating their filing status. Approximately
3% of e-filers claimed the Nonrefundable Renters Credit, while less than 0.2% of paper filers did. No
ReadyReturn users claimed the Child and Dependent Care Expenses Credit.

2
Percent of refund returns with DDR elected.
3
Percent of balance due returns with an electronic funds withdrawal request. It is unknown the number of
taxpayers who chose post-filing electronic payment methods, such as credit card payments and FTB’s Web Pay.
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ReadyReturn Preliminary Report
140 e-filed ReadyReturns fell out for a fallout rate of 2.5%. Of these:
♦ 57 were a second return from the taxpayer for the year.
♦ 10 generated a Return Information Notice to the taxpayer.

114 paper ReadyReturns fell out for a fallout rate of 4.5%. Of these:
♦ 43 were the second return in.
♦ 9 generated a Return Information Notice to the taxpayer.

Demographics
The top cities for e-file and paper ReadyReturn users closely mirror the top cities for invitations:

Table A-3: Top 5 Cities (Users)

Invitation e-file Paper


City
Rank Rank Rank
Los Angeles 1 3 2
San Francisco 2 1 1
San Diego 3 2 4
Sacramento 4 4 3
San Jose 5 5 5

The median age of taxpayers who used the ReadyReturn Website was 34 years. For paper filers, the
median was 43 years.

Chart A-5: Age Distribution (Users)

ReadyReturn User Age Distribution

35%
Median Age
30% (e) 34; (p) 43
25%
20%
15%
10%
5%
0%
>20 20-29 30-39 40-49 50-59 60-69 70+ Unknown

ReadyReturn (e) ReadyReturn (p)

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ReadyReturn Preliminary Report
Filing Behavior
The majority (56%) of taxpayers who used the ReadyReturn Website to file their return had filed their
2003 tax return on paper. Ninety percent of all ReadyReturn users had prepared their own 2003 tax
return.

Chart A-6: Filing Method (Users)

How ReadyReturn Users Filed Last Year

80.0%
70.0%
60.0%
50.0%
40.0% ReadyReturn (e)
30.0% ReadyReturn (p)
20.0%
10.0%
0.0%
e-file TeleFile CalFile Paper

Because we mailed the ReadyReturn invitations in mid-February, the actual filing dates are a little later
than the invitees’ history on the whole. The majority of returns filed under both methods were filed in
April.

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ReadyReturn Preliminary Report

A-3 – Non-Participants
As of May 31, 2005, approximately 35,000 invitees had filed a return other than a ReadyReturn. The
remaining 7,000 taxpayers had not filed a return by April 15th4 . Of those who have filed, 43% chose an
electronic filing method while 57% filed on paper.

The volume of non-participants indicates that taxpayers were not intimidated and did not feel they had
to accept the filled-in tax return.

Return Information
Based on the returns filed by non-participants:
• 82% of non-participants were owed a refund.
• 12% had a balance due.
• 6% had a zero balance.
• The median refund amount was $104.
• The median balance due amount was $125.
• 31% of refunds were distributed through direct deposit.
• The median adjusted gross income was $30,726.

2,967 e-filed ReadyReturns fell out for a fallout rate of 2.5%. Of these:
♦ 109 were a second return from the taxpayer for the year.
♦ 1,070 generated a Return Information Notice to the taxpayer.

Demographics
The top cities for non-participants exactly mirror the top cities for invitations:

Table A-4: Top 5 Cities (Non-Participants)

Invitation Non-Participant
City
Rank Rank
Los Angeles 1 1
San Francisco 2 2
San Diego 3 3
Sacramento 4 4
San Jose 5 5

4
California has an automatic six-month extension of time to file.
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ReadyReturn Preliminary Report
The median age of taxpayers who chose not to participate was 33 years, the same as the invitation
population.

Chart A-7: Age Distribution (Non-Participants)

Non-Participant Age Distribution

40%
Median Age: 33
35%
30%
25%
20%
15%
10%
5%
0%
>20 20-29 30-39 40-49 50-59 60-69 70+ Unknown

Filing Behavior
The non-participants showed a slight increase in the use of electronic filing methods for their 2004
returns when compared to their 2003 returns.

Chart A-8: Filing Method (Non-Participants)

Non-Participant Filing Methods

70%
60%
50%
40%
2003
30% 2004
20%
10%
0%
e-file NetFile/CalFile TeleFile Paper

Approximately 16% of the non-participants filed before we sent them an invitation. Most of these (85%)
were sent to us 10 days or less before the day we sent the invitations. Given the standard paper
pipeline processing time, this is an acceptable level of error in eliminating taxpayers who have already
filed.

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ReadyReturn Preliminary Report

A-4 – Control Group


From the control group of 31,500 taxpayers who qualified for ReadyReturn (but were not invited to
participate in the pilot) to make up our control group, we sent surveys to 7,500 taxpayers on May 3,
2005.

As of May 31, 2005, over 84% of the control group had filed their 2004 tax return. Forty-seven percent
chose an electronic filing method while 53% filed on paper.

Return Information
Based on the returns filed by the control group:
• 80% of the control group were owed a refund.
• 13% had a balance due.
• 7% had a zero balance.
• The median refund amount was $100.
• The median balance due amount was $101.
• 33% of refunds were distributed through direct deposit.
• The median adjusted gross income was $30,397.

512 e-filed ReadyReturns fell out for a fallout rate of 2.5%. Of these:
♦ 9 were a second return from the taxpayer for the year.
♦ 237 generated a Return Information Notice to the taxpayer.

Demographics
The median age of the control group was 33 years, the same as the invitation population and non-
participant group.

Chart A-9: Age Distribution (Control Group)

Control Group Age Distribution

40% Median Age: 33


35%
30%
25%
20%
15%
10%
5%
0%
>20 20-29 30-39 40-49 50-59 60-69 70+ Unknown

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ReadyReturn Preliminary Report

Filing Behavior
The control group showed a similar trend toward e-file as the non-participant group did.

Chart A-10: Filing Method (Control Group)

Control Group Filing Methods

60%

50%

40%

30% 2003
2004
20%

10%

0%
e-file NetFile/CalFile TeleFile Paper

Approximately 20% of the control group filed before the date we would have sent them an invitation.

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ReadyReturn Preliminary Report

A-5 – Profile Comparisons


In all groups, more taxpayers received a refund than had a balance due.

Refund & Balance Due Percentages

100%

80%

60%
Balance Due
40%
Refund
20%

0%
ReadyReturn ReadyReturn Non Control
(e) (p) Participant Group

The non-participants had the highest median refund at $104.00.

Median Refund Amount

$120
$100
$80
$60
$40
$20
$0
ReadyReturn ReadyReturn Non Control Group
(e) (p) Participant

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ReadyReturn Preliminary Report
Taxpayers who e-filed their ReadyReturns were the most likely to elect to have their refund
deposited directly into their bank account.

Percent Electing Direct Deposit

50%

40%

30%

20%

10%

0%
ReadyReturn ReadyReturn Non Control Group
(e) (p) Participant

Taxpayers who filed their ReadyReturns on paper had the largest median balance due ($330),
but had the smallest percent of balance due returns (8%).

Median Balance Due Amount

$350
$300
$250
$200
$150
$100
$50
$0
ReadyReturn (e) ReadyReturn (p) Non Participant Control Group

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ReadyReturn Preliminary Report
Taxpayers who filed their ReadyReturns on paper had the highest median age at 43 years.
This is the only group whose median age was greater than 40.

Median Age

45
40
35
30
25
20
15
10
5
0
ReadyReturn (e) ReadyReturn (p) Non Participant Control Group

The increase in e-file use in 2004 was consistent across all groups.

e-file & Paper Percentages

100%
90%
80%
70%
60%
50%
40%
30% Paper
20%
10% e-file
0%
Return

Return
Control

Control
Ready

Ready
Participants

Participants
Group

Group
Non-

Non-

2003 2004

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