The number of Hawai'i taxpayers filing their federal taxes electronically grew by nearly 10 percent last year.

Almost 270,000 Hawai'i residents used electronic filing for their returns last year compared with 246,941 in 2005, according to the Internal Revenue Service.

That represented about 44 percent of all Hawai'i returns filed in 2006, but was below the 55 percent nationally that filed electronically. It's also about half of the 80 percent goal for electronic filing that the IRS hopes to eventually reach nationally.

"We're trying to get everyone to e-file," said Bert Dumars, director of electronic tax administration for the IRS. "E-file returns are far more accurate."

IRS figures show returns prepared using tax software and e-filed have a 1 percent error rate versus the 20 percent for returns prepared on paper and mailed in.

The returns are also less expensive for the IRS to review, costing about one-third of what paper returns take to process.

People who file electronically and choose direct deposit of their refunds typically receive their money faster, the IRS said.

Dumars spoke with reporters from across the country yesterday on a conference call to promote this year's kickoff of the "free-file" program the IRS has with 17 software companies. Under the program people can log into the www.IRS.Gov Web site to access tax-preparation programs and file their returns for free.

To qualify, participants can't have an adjusted gross income of more than $52,000.

Last year about 4 million people nationally used the free file program, including 13,166 in Hawai'i.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.