WASHINGTON – The Internal Revenue Service won’t meet its goal of converting 80 percent of taxpayers from paper to electronic filing in 2007, but could get there by 2011, agency overseers reported last week.
The independent IRS Oversight Board recommended that lawmakers give the IRS an extra four years to meet the electronic filing target, set by Congress in a 1998 law.
Rather than allowing the goal to expire, the board said an extension could keep the IRS and others focused on increasing electronic filing.
The board credited the 2007 deadline with pushing the IRS to increase the number of taxpayers who file their returns electronically, a number that exceeded 50 percent last year.
“Its visibility and clarity galvanized the IRS and its stakeholders into action and resulted in changed behavior by taxpayers, tax preparers and tax software companies, among others,” the board said.
The board projected that four of five taxpayers will file electronically by 2011 if the tax collectors can keep the program growing at the same rate.
The IRS has reduced money and time spent on processing paper returns with the growth of electronic filing.
It’s not a surprise to the tax agency, lawmakers or the Oversight Board that the IRS will not meet the 80 percent electronic filing goal next year.
IRS spokesman Terry Lemons said the agency is “very happy” with annual increases in electronic filing. “We see those trendlines continuing, and we expect to see more growth in e-file in the future,” he said. “We’re anticipating a substantial increase again this year.”
Harley Duncan, executive director of the Federation of Tax Administrators, said federal efforts to expand electronic filing have benefited from similar efforts among states, some of which have made electronic filing mandatory. When larger states have enacted those laws, he said, “You can see the IRS meter move.”
Federal and state tax officials, however, still face challenges getting some people to adopt electronic filing. The IRS made great strides, but it will be “a stretch” reaching the 80 percent goal, he said.
“First of all, there’s still people who do it on paper, as odd as that may be,” Duncan said.
Tax officials will have a more difficult time among some elderly taxpayers and those without access to the Internet. Some professional tax preparers resist changing their operations.
The IRS Oversight Board has recommended to Congress that it give taxpayers an extra incentive by extending the filing deadline for electronic filers from the traditional April 15 to April 30.
Senate Finance Committee Chairman Charles Grassley, R-Iowa, said he appreciated the proposal for a new deadline.
“If we’re going to accomplish this goal, it’s clear that the IRS and the private sector need to work together to accomplish it and make it easy for taxpayers to file electronically,” Grassley said.
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