Apr. 14--As the income tax-filing race heads for Wednesday's finish line, the economic realities of 2008 are making their mark.

Local tax preparers are seeing more client hardships, millions of taxpayers are taking advantage of free-filing opportunities, and the Internal Revenue Service is emphasizing that it's willing to work with households struggling to make tax payments.

"We think there's a situation where some people, for the first time ever, can't pay the taxes that they owe," said John Stout, an IRS spokesman in Portland, Ore. "We're reminding people to be sure to at least pay something on their return."

Stout said the IRS will work with financially stressed taxpayers who contact the IRS to get some type of payment plan.

"We realize that the economy is dealing a hard blow to many people," he said.

To date, Stout said, the IRS has seen about 81 million online filers nationwide, a 12 percent increase over last year.

Stout said it appears taxpayers "are getting more comfortable with filing online."

And he says there's an added incentive: By e-filing, you can get your tax refund by direct deposit in eight to 10 business days, compared with eight to 12 weeks by mail.

Mountain View-based Intuit Inc. said a special free- filing offer has likely driven up online sales of its popular TurboTax filing program this year.

As of Monday, Intuit said it had sold 13.8 million TurboTax units, up 10 percent from last year.

"Not surprisingly, we think more people are seeking low-cost or no-cost tax-prep options this year," said Intuit spokeswoman Julie Miller.

There's also more procrastinating among tax filers this year, she said.

"Folks who have been impacted by the economy, either through their investments or those who have lost a job, may be less clear over what their taxes are going to look like," Miller said.

"That level of uncertainty, we think, is driving people to wait."

A random survey of Sacramento-area tax preparers on Monday indicated that most are seeing about the same level of business as last year.

Yet all said they are seeing more clients dealing with financial damage inflicted by the economy last year.

"We're seeing a lot less interest (income)," said Karen Edgar with Edgar & Associates LLP in Sacramento. " -- The other thing I'm noticing is more (home) short sales. I expect we'll see more next year."

Gene King, a national spokesman for H&R Block, said offices in some locations may stay open 24 hours through Wednesday to handle customer queries.

Referring to some of the recent stimulus package tax credits, he said, "Most taxpayers are confused about the impact recent (federal) legislative activity has on their taxes."

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Call The Bee's Mark Glover, (916) 321-1184.

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