E-Filing Goal Will Need Joint Effort

The 80 percent e-filing goal by 2007 has been moved forward five years to 2012, now making it entirely possible that it will actually be reached. Calling the new goal "difficult but doable," the IRS Oversight Board blamed the inability to meet the original 2007 goal on a number of factors, including problems and delays with the IRS Business Systems Modernization program and a public wariness about transmitting personal data over the Internet. The good news is that the board singled out the professional tax prep industry for praise. "Particularly impressive has been the growth in individual returns prepared by tax professionals and filed electronically, which increased from approximately 27 percent of paid preparer returns in 1998 to around 70 percent today." Moreover, the report said that achieving the new goal is doable only with the help of the preparer community. "Given Current progress and strategic planning, the Board believes that the IRS can meet an 80 percent e-file goal by 2012--but will need the help of the professional tax community and Congress to do so," it said. Just in case, though, it recommends some initiatives first proposed by ETAAC (the Electronic Tax Administration Advisory Committee) that will have an impact on the life of tax preparers. Among them are lifting the congressional prohibition on the IRS' ability to require the electronic filing of Form 1040 returns, and giving the IRS the discretion to implement e-file mandates for individual returns in the future, "particularly for those returns prepared by paid tax professionals." Fortunately, the board softens the blow by recommending that the IRS exhaust all reasonable steps to maximize voluntary participation first, and that it study the trade-offs between the expected benefits from increased e-file and the burden imposed on filers and preparers before setting any mandates. It goes without saying that if 2011 comes and the 80 percent goal hasn't been reached, it will be tempting to issue mandates to push the results over the goal line. That's not a good idea. Here's hoping Congress and the IRS resist the temptation to resort to draconian measures in order to achieve what should be voluntary behavior.