E-Filing Lags

Since about 54% of individual taxpayers e-filed in 2006, it seems unlikely that a congressionally mandated goal of 80% for this year will be met, the IRS Oversight Board said in its annual report to Congress. The board suggested extending the goal to 2012.

E-filing declined in 2006 among individuals preparing their own returns, partly because the IRS ended its TeleFile option for form 1040EZ, the board said. Also, it said, limiting Free File eligibility to taxpayers with adjusted gross incomes of $50,000 or less ($52,000 for tax year 2006) contributed to a 23% drop in the number of returns received through that program.

In another study, business executives weren’t exactly sanguine about e-filing, either. Deloitte & Touche surveyed hundreds of tax executives, noting that many businesses were required to begin e-filing for tax year 2006. Eighty-seven percent of the executives surveyed said their cost and effort increased when they began e-filing for calendar year 2005, when larger businesses were first required to do so. Among the challenges they identified were software glitches, clearing error codes and using correct file formats. About 75% said they were neutral toward e-filing or unconvinced its benefits outweighed the costs.