About 2.9 million taxpayers have e-filed from their personal computers, a 35 percent increase over the same period last year. The Free File Alliance's nearly 639,000 returns equal almost 90 percent of this increase. The Free File Alliance is a partnership involving the IRS and various private companies that offer free e-filing to taxpayers meeting certain criteria.

The IRS launched its Free File Web site in January, which is expected to serve up to 78 million taxpayers. The government-industry collaboration aims to switch paper filers to the more efficient e-file method with a cost-free offer.

"E-filing continues to grow because taxpayers see its benefits of more accurate returns and faster refunds," said IRS Acting Commissioner Bob Wenzel. "And more people have access to this through the Free File program on our Web site."

The early refund statistics also show that the IRS has certified $38.4 billion in refunds, up from nearly $37 billion at this time last year. Also, the average refund is $2,323 -- a 2.3 percent increase.

In an aggressive marketing campaign, the IRS has also turned its sights on tax practitioners, urging them to embrace the convenience of e-filing. New online tax forms, XML technology, and other improvements should be incentive to give it a try, the IRS has argued.

The IRS expects to receive 54 million e-filed returns in 2003, up from 47 million last year. The IRS has set its e-filing goal for 80 percent in 2007.