Although the Internal Revenue Service is cajoling taxpayers to file their returns electronically -- in a move designed to save the Treasury billions of dollars -- at least one top IRS official copped to submitting her return on paper.

One of the highest-profile IRS officials, National Taxpayer Advocate Nina Olson, confessed to Congress that she mailed in a printed version of her 2005 tax return in order to save $14.95.

"Although I deeply believe that e-filing is best for both taxpayers and the IRS, for a host of reasons, I resented the notion that I would have to pay separate fees to prepare my return and to file it [electronically]," she said in testimony before the Senate Finance Committee.

Olson, who prepared tax returns professionally for 27 years before becoming the taxpayers' top advocate, told Congress that her government salary disqualifies her from using the Free File products designed to expedite e-filing.

Olson is just one of millions of U.S. taxpayers who are abandoning e-filing in the wake of a new agreement struck between IRS and commercial tax preparation firms in the Free File Alliance, which places income restrictions on the use of Free File products for the 2005 tax year.

Citing IRS statistics, Senate Finance Committee chairman Chuck Grassley, R-Iowa, said that the new fees have reduced participation in the Free File program by 21 percent this year. Other IRS data shows that nearly 45 million returns prepared using computer software are sent in through the mail rather than filed electronically, though the IRS has released statistics showing electronic filing percentages are up.

"This is a shame, because the practice delays the length of time for processing refunds, it requires the IRS to devote additional resources to entering the data manually when it receives the return, and it creates a risk of transcription error," Olson said.

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