The Internal Revenue Service is considering the possibility of allowing free electronic filing of employment tax returns.
The IRS said in an announcement that its strategic plan includes the goal of increasing the e-file rate for business tax returns from 40 to 50 percent by 2017. However, the percentage of employment tax returns that are filed electronically remains below the overall average for business tax returns and tax-exempt organizations, with an e-file rate of only about 31 percent.
“The gap between the e-file rates for employment tax returns and all other returns allows a focus on employment tax returns to provide measurable growth in the overall rate for electronic filing,” said the IRS. “Potential approaches to increase electronic filing of employment tax returns are found in existing rules governing individual and business returns, and in recent successes for individual e-filing mandates.”
The employment tax returns would include forms such as the 940, 941, 943, 944, and 945, to report FUTA, FICA, and income taxes withheld, according to the Journal of Accountancy.
The IRS is looking for comments on the proposal, and answers to questions such as “What do you, your business, or agency see as the main advantages and disadvantages to employers to e-file employment tax returns through a free online filing option offered through a public-private partnership; of the free online filing capability?” and “the circumstances under which employers currently mailing in employment tax returns might utilize a free online filing option offered through a public-private partnership.”
The IRS also wants to know about any burdens of requiring employers to file all employment tax returns electronically, the burdens of requiring only paid preparers of employment tax returns to file the returns electronically, and the need to except certain taxpayers or tax professionals from any e-file mandate for employment tax returns, among other matters.
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