January 19, 2004

Re: Mandatory E-Filing

Dear Client:

Over the years the government has been setting up their systems to process returns electronically. Now the returns are being processed more efficiently through e-file than paper returns. This year the state of California is requiring tax preparers that process more than 100 returns to e-file 2003 tax returns. This is mandatory. The state will assess penalties to preparers that do not comply.

We are sending this letter to make you aware of this new requirement. The procedures for filing your 2003 return will be different this year.

This year you will not file a paper copy of your return to the IRS or to the state. Instead we will provide you with a one (1) page form that you will send to us stating that you have reviewed your return. Once we receive the returned form, we will then transmit your tax returns electronically to the IRS and state agency. We will also mail the one page form to the government at that time.

You will still receive a paper copy of your return for your review. Starting this year we will also provide you with a copy of your tax return on a CD. Hopefully, this will make it easier for you to make copies of your return if needed.

There are some exceptions to e-filing and a possible election that can be made by the taxpayer to opt out of e-filing. We will gladly discuss this with you on an individual basis.

This change should be viewed in a positive manner. Not only will there be a substantial reduction in the use of paper but there should be a reduction in the errors caused by the government agencies in processing your return.

If you have any questions or concerns regarding e-filing your tax return, please give us a call.

Sincerely,
Robert R Redwitz & Co
Certified Public Accountants & Consultants