The move to online tax filing continues to grow each year, and once consumers convert to online filing, they don't turn back, says a new report from The Conference Board and global market information provider TNS.

About 40 percent of online households are planning to file their federal taxes online this year, up from less than 34 percent four years ago, according to The Consumer Internet Barometer, a quarterly report produced by the two organizations. The report surveys 10,000 households across the country and tracks who's doing what on the Internet.

"Convenience and speed are the primary reasons behind online filing," says Lynn Franco, director of The Conference Board's consumer research center. "Concerns over security, once a major deterrent, have declined substantially. And, once consumers convert to online filing, they don't go back. A once cumbersome, rather stressful process is becoming easier and faster, which could very likely make paper filing obsolete in the not-so-distant future."

Consumer concerns about conducting financial transactions online have been easing over the last few years. Those who are extremely concerned with the security of filing taxes online have dropped from about 50 percent in 2005 to only 36 percent today. Conversely, those who claim they aren't very concerned or not concerned at all have increased to nearly 40 percent, from 27 percent five years ago. In general, women are more concerned with security when conducting financial transactions online.

Don Ryan, vice president of technology and media at TNS, says, "This rapid migration to online filing is further evidence that consumers will be conducting most of their financial transactions online in the next five years. This trend will continue to transform the relationship between the consumer and financial institutions."

Consumers who convert to online tax filing tend to continue doing so in the future. Among online filers, 40 percent have been filing their taxes electronically for five years or more, up sharply from just 22 percent in 2005. Among those not filing electronically (44 percent offline and 15 percent still undecided), the most popular reason (cited by 40 percent) is that the individual doesn't do his or her own taxes. Concern about submitting personal information online is the second most likely factor, cited by just 19 percent. Another notable barrier, cited by 14 percent, is the complexity of the tax return.

Among online filers, roughly 40 percent intend to use a professional service, with a similar percentage using do-it-yourself tax software. Only about 20 percent intend to use IRS e-file.

Convenience is the most cited reason for prompting consumers to file their taxes online. Nearly sixty percent say they're filing online because it's easier than filing by paper. Quicker refunds also were a major motivator, with 51 percent of consumers claiming that speed motivated them. Comfort with electronic filing came in a distant third, with only 28 percent claiming this was a factor in their conversion. Other reasons include having access to "a secure/direct line to the IRS," "not having to use a professional service," and "friends/family recommended it."

More than 75 percent of online tax filers chose to receive their 2007 refund by direct deposit, with only one out of eight requesting a check.

The Consumer Internet Barometer is based on a quarterly survey. A unique sample is surveyed each quarter. Return rates average 70 percent, and data are weighted to reflect the latest U.S. household demographic information. The latest survey was conducted during the first quarter of 2009.

The Conference Board, an independent nonprofit organization, publishes information and analysis and makes economics-based forecasts and assesses trends. It is best known for such economic indicators as the Leading Economic Index and the Consumer Confidence Index. TNS is a London-based provider of information, analysis, and insight about consumer behavior.