by Ken Rankin

Washington - Congressional proposals to encourage taxpayer interest in e-filing by shifting the tax deadline are drawing a chilly response from the American Institute of CPAs.

The legislation, part of the Taxpayer Protection and IRS Accountability Act of 2002, would grant individual taxpayers an extra half month - until April 30 - to submit their tax returns if they do so electronically.

Supporters of the plan contend that the extra filing flexibility will serve as an incentive for millions of Americans to abandon paper returns and switch to e-filing. Last year, the Internal Revenue Service issued a mandate of having roughly 80 percent of all returns e-filed by the year 2007.

Currently, most electronic filing is done by taxpayers hoping to accelerate the processing of tax refunds. The proposed legislation would provide a comparable e-filing cash flow incentive to taxpayers who owe additional taxes.

But the AICPA has raised objections to the legislation, warning that a change in the tax date for electronic filers could add more complexity to the tax system, create taxpayer privacy concerns and encourage a last-minute tax processing log-jam for tax practitioners and the IRS.

"April 15 has been engraved into our national psyche as the date by which we must take some action on our taxes," AICPA Tax Executive Committee chair Pamela J. Pecarich said in a letter to Senate Finance Committee chairman Max Baucus, D-Mont., and ranking GOP member Charles Grassley, R-Iowa. "Although one intent of this proposal is to help people who have trouble getting organized by April 15, we suspect that further delay in getting organized may result, yielding one last haven for procrastinators."

Pecarich also warned that an extended filing deadline would add to tax season stress for the nation’s tax preparers. "Practitioners do not relish extending their busy season 15 days and creating a last-minute April 30 push to take maximum advantage of the Ôfloat’ on tax-due returns," she said.

Because taxpayers would gain the maximum cash-flow benefit by filing on April 30, the legislation would create a "last-day - and potentially last-minute - rush of returns [that] will cause processing problems for practitioners and the IRS, and could cause some returns to be filed late as a result of processing log-jams," Pecarich told congressional leaders.

Although she endorsed the goal of the legislation and gave the plan high marks for "creativity" in promoting e-filing, Pecarich argued that the objectives of the bill’s supporters could be achieved through far less disruptive means.

Instead of extending the filing deadline, the AICPA representative suggested that the IRS simply delay processing of electronic payments on e-filed returns until April 30 - an approach that would provide a cash-flow incentive for tax-due e-filers without creating new problems with the tax system.

The AICPA also voiced concerns that changing the filing date for e-filers could create widespread problems for taxpayers in states and local jurisdictions that don’t conform their laws to the proposed new April 30 filing deadline.

The institute also suggested that IRS officials are overstating the benefits of electronic filing. "Contrary to IRS advertising ... e-filing does not reduce tax paperwork for taxpayers and practitioners," and "computer-prepared paper returns are no less accurate than those submitted electronically," Pecarich maintained.

Additionally, she said, "e-filing is more - not less - expensive," and "there are lingering concerns about privacy and the government’s ability to collect more information from electronically filed returns than from paper returns."

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access