IRS aims to increase electronic tax filings

The Internal Revenue Service is hoping that an expansion of its digital tax services will result in a 36 percent increase in the number of taxpayers using these electronic filing options by April 15.

This year, for the first time, taxpayers who use a variety of commercial tax return preparation software packages will be able to file their returns from home through six vendors authorized to transmit them to the IRS. IRS spokesman Don Roberts said as many as 100,000 individuals are expected to take advantage of the On-Line Filing program this year.

Meanwhile, the agency expects up to 3 million filers who use the one-page 1040EZ form—slightly more than 10 percent of those eligible—to submit their returns over the telephone using TeleFile, which is available nationwide this year for the first time. Another 13 million taxpayers are likely to file through the IRS' 6-year-old Electronic Filing (ELF) program, through which approved preparers file tax returns and paper signature documents to the IRS.

Internet Filings Still Undecided

Roberts said the agency is still reviewing whether to allow a test this year of electronic filing using the Internet or another method of transmitting directly to the agency. Called Cyberfile (formerly GO-ELF), this program aims to make filing tax returns paperless and free, but some government officials and security experts have questioned how the IRS will minimize the risk that individual tax returns could be hacked.

Congress has pressured the agency to offer more electronic filing options, particularly services that are paperless and free of charge.

The main difference between the new On-Line Filing service and the original ELF program is that taxpayers will be able to file their returns from home rather than going to a tax preparer. On-line filers will still have to pay a fee to a middleman who transmits their returns to the IRS, and they will also be required to mail the IRS a paper signature form, Form 8453-OL. Roberts said the transmission fees are being set by the vendors.

Earlier this month, the IRS made a list of transmission service providers and acceptable software packages available through its home page. The address is http://www.irs.ustreas.gov/prod/elec_svs/online.html.