In Favor of Electronic Filing

BY DOUG ELLIS

When I first read the letter “ Prefers Paper Filing ” ( JofA , Mar.03, page 11) I was stunned. I thought it proposed preparing tax returns “the old fashioned way” with pencil and paper, or at least without the benefit of technology. I read it again, and assumed it actually referred to the process of deciding on a method of filing a completed return with the IRS. I still had a problem with the letter. Upon comparison of the two methods, electronic vs. paper, I believe there is no competition.

Paper filing requires me to release control of the prepared return into several hands. Someone needs to make sure all proper forms are included in the right order, signed in the correct place and with proper supporting documents attached—this, by itself, is quite a process. Next the return must be put into an envelope with the proper address and postage, placed in a mail box or picked up by a postal carrier by April 15. What happens next entails a series of postal exchanges and movement by various modes until the return reaches its appointed destination, usually within three business days. Once the IRS receives it, the return is sorted, keyed into the computer, rekeyed for accuracy, passed through a validation process, approved, scanned for long-term storage and then supposedly shredded.

Now, let’s compare this with the electronic process: I have a completed return, select “process return for electronic filing” and the software checks the return for any items such as invalid characters or missing fields that do not pass a set of criteria for electronic filing. Once approved, the return is electronically submitted and I get an “electronic receipt” from the processing center that the return has been received, followed shortly by an approval or rejection notice.

On the surface, the two methods appear to achieve the same result, although, in using the electronic method there is much less hassle. With e-filing we also have confidence the correct numbers have been entered into the IRS computer (a large number of audits or IRS letters are generated by miskeyed returns). Add to this the ability to streamline the refund process and the acknowledgement of receipt, and the benefits of e-filing are numerous.

Given these two options, I have no problem looking my clients in the eye and telling them e-filing is simpler and cheaper. I also would prefer to give them an electronic copy of their return: A CD with seven years of returns on it is more useful than a stack of papers. I believe paper returns have gone the way of the green bar reports, and frankly, I’m glad.

Doug Ellis, CPA, CITP
Philadelphia

SPONSORED REPORT

Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.

QUIZ

News quiz: IRS warning on cyberattacks and a change in pension rules

Once again, the IRS sounds the alarm about a threat from cyberthieves. See how much you know about this and other recent news with this short quiz.

CHECKLIST

Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.