Tax industry says its involvement is key to IRS increasing e-filers

The IRS can only achieve its goal of 80 percent e-filing by 2007 if it can improve performance for those who already file electronically and eliminate obstacles for new users’ adoption. That’s what organizations told the IRS Oversight Board at a hearing yesterday to solicit ideas for IRS strategies to improve tax administration.

Tax professionals are essential to ensuring that more returns are filed electronically, said Robert Taylor, chairman of the Council for Electronic Revenue Communication Advancement, which comprises e-filing, tax software preparation, electronic tax administration and modernization stakeholders.

Nothing is more important than a program running smoothly “when trying to convince skeptical tax professionals that they should jump into electronic filing,” Taylor said.

But several glitches already have occurred and been corrected for this year’s tax-filing season, Taylor said. “What’s more, the weeks leading up to the commencement of the season were, quite frankly, harrowing. Forms were late, specifications changed at the last minute,” he said.

Although glitches early in the tax season are not unusual due to updated tax laws and the continuing efforts to improve processing at the IRS, tax professionals noted that paper filers did not have to deal with these problems.

But tax professionals lack incentives to bear the cost of purchasing electronic-filing software, the time to properly format federal and state returns for e-filing, and the fees to use credit and debit cards for tax payments, said Jeff Adelstone, chairman of the Information Reporting Program Advisory Committee, a tax practitioner group.

Taxpayers anticipating a refund will receive their money faster through e-filing, but those who owe taxes have no incentive to e-file, Adelstone said.

What’s more, many forms are still not available for e-filing, and any amended filings must be submitted on paper, he said. Finally, “taxpayers are skeptical about giving their credit card or bank account data to the IRS in fear that the IRS will use the data for collection or other unauthorized uses,” he said.

The IRS has increased e-filing by realigning its service centers, establishing a special telephone line specifically for tax professionals trying to resolve e-filing problems, and adding six new forms and three new records for e-filing. The tax agency also has begun accepting payments for small-business returns and strengthened its ability to prevent online fraud.

Most recently, the IRS introduced the 1040 Central Web site, which contains information to help taxpayers complete a return electronically.

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