Many large and midsized companies, which are required by the Internal Revenue Service to file their 2005 taxes electronically next year, have not begun preparing for the change, according to a recent poll conducted by Big Four firm KPMG.
More than one-third (35 percent) of respondents from companies covered by the mandate said they had not yet begun to prepare for e-filing. All companies with assets of $50 million or more and which file at least 250 returns annually must electronically file their 2005 taxes in 2006.
And although 30 percent of those surveyed are researching their options, followed by 18 percent who have started to evaluate alternatives, only 15 percent have a plan in place to satisfy the e-filing requirement. The remaining 2 percent of respondents had undergone the process already, filing their 2004 returns electronically.
"Although corporate taxpayers may think they have plenty of time to prepare for this change, they should understand that the preparation of this year's return may require several additional weeks of lead time to transition from traditional tax return preparation processes to the single electronic return transmission required," said Michael Dolan, director of IRS policies and dispute resolution in the Washington National Tax practice of KPMG, in statement.
The poll also revealed that the most significant e-filing concern among corporate taxpayers involved issues related to the attachment of documentation, noted by 41 percent of respondents, followed by difficulties importing disparate data into one format (35 percent). Only 9 percent of participants were concerned with security issues.
The overwhelming majority of respondents -- 73 percent -- also indicated that they planned on licensing tax software to process and e-file their tax returns. The other two options that companies have to comply with the e-filing mandate include hiring a third-party preparer to handle the return (14 percent of respondents), or developing their own proprietary software (no respondents). Yet 12 percent have not yet decided on how they will comply with the e-filing requirement.
The poll was based on an electronic survey of 205 corporate tax executives conducted on Nov. 18, 2005.
