This blog was last updated on June 27, 2021
The Treasury Inspector General for Tax Administration (TIGTA) has released a report saying the IRS needs to develop a plan for increasing the rate of business electronic filing. Although business e-filing rates went up during the 2014 tax season and have done so over time, as indicated by an October IRS report, TIGTA said the pace isn’t as fast as it should be.
In particular, the rate of business e-filing isn’t keeping pace with individual taxpayer e-filing.
“For example, in processing year 2012, individual taxpayers e-filed 118.9 million (81 percent) tax returns; whereas in tax year 2012, business taxpayers e-filed 18.5 million (41 percent) tax returns,” the report read. “For business-filed information returns, a total of 1.95 billion (97 percent) were e-filed for this same period.”
The IRS has already taken a proactive approach to encouraging expanded business e-filing by permitting more business tax information returns to be processed through the modern e-filing (MeF) system. Currently, the system can be used for 141 types of business returns, and in 2012, 19 types could not be processed through the MeF system. TIGTA said those 19 types amount to 1.1 million paper-filed returns.
E-filing is a key IRS goal
The IRS views improving the rate of e-filing as one of its key objectives. In fact, the Electronic Tax Administration Advisory Committee (ETAAC), which provides an annual report on the agency’s progress on and recommendations for reaching stated e-filing objectives, came about as part of the Restructuring and Reform Act of 1998. In its most recent report, ETAAC praised the agency for the headway the IRS has made so far and suggested the addition of individualized PINs and improvements for electronic signatures to strengthen e-filing security.
TIGTA had its own recommendations in its report. Here are a few:
- The IRS should create a service-wide plan that details steps the agency will take to achieve a higher e-file rate among businesses.
- The agency should expand the number of business returns that can be e-filed.
- Procedures need to be outlined regarding penalties that will apply to businesses that don’t meet their electronic tax information reporting obligations.
- TIGTA suggested the IRS determine whether it would be feasible to give businesses a free fillable forms option.
The IRS agreed with TIGTA for some of the recommendations, which indicates some business e-filing changes could appear in the future.
