More taxpayers file online returns

Electronic Filing Report

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More than half of all taxpayers filed online in 2005, according to a report for Congress released today. The report recommends extending e-file through 2011, while suggesting the congressionally mandated goal of 80 percent be pushed back four years.

The Internal Revenue Service Oversight Board’s annual report on e-filing showed 52 percent of all taxes were filed online. The IRS received 66 million returns through IRS e-file, an 11 percent increase from 2004. More than 16 million taxpayers filed from a home computer, a 17 percent increase from the same time last year and 2 million more than in 2004, according to the report. The board also found a 12 percent drop in the use of TeleFile.

“E-filing has now moved into new territory; it is more the rule, rather than the exception to the rule,” the report states.

The goal, part of the IRS Restructuring and Reform Act of 1996, calls for the IRS to have at least 80 percent of all such returns filed electronically by 2007. But the board recommends Congress extend the goal to 2011. This approach seems achievable based on historic growth rates and adds four years to influence taxpayer behavior, according to the report.

“The congressionally mandated e-filing goal has exerted a powerful effect on the tax administration community and on the IRS,” said IRS Oversight Board Chairman Raymond T. Wagner. The report stated that the e-filing goal “may be the most successful goal in IRS’ history.”

Despite the gains, the report states that the IRS’ current marketing will not encourage the “reluctant taxpayers and practitioners” into the e-file fold. It recommends creating a long-term marketing and communications campaign strategy to effectively convert the reluctant.

The board also notes in the report that although electronic tax administration acts as a primary means for transforming the IRS and its service to taxpayers, the IRS must also take into account taxpayers without access to computers.

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