IRS cuts out tax paperwork

The Internal Revenue Service plans to make it easier for tax accountants to file electronically next year by eliminating the need to follow up with signed tax forms after the fact.

While the IRS sees electronic filing as a way to reduce the cost and energy of processing tax forms, the agency in past years still required tax preparers to mail in a signed document— Form 8453— to ensure the authenticity of the filing.

However, beginning Jan. 15, 1999, opening day for electronic filing, the IRS will assign a personal identification number (PIN) to tax preparers who have been approved by the agency to participate in a pilot program created to provide an electronic filing system that does not require mailing paperwork. If the pilot is approved, the IRS' e-file will become a completely paperless program.

"We are making electronic filing more attractive to tax preparers by eliminating paperwork and reducing costs,'' said IRS Commissioner Charles Rossotti. "This in turn will make electronic filing simpler and more convenient for millions of taxpayers.''

Preparing the Pilot

To reach that goal, the agency is partnering with H&R Block Inc., Intuit Inc. and the National Association of Enrolled Agents to develop the pilot for the 1999 tax season. The private companies nominated more than 9,100 tax preparers to participate, and the IRS selected more than 8,100, based on their past performance in the electronic filing program.

In addition to recommending tax preparers to the IRS, H&R Block and Intuit will provide modified tax software to the agency. That software will allow the tax preparer to select a PIN to be used as an electronic signature, said Don Roberts, an IRS spokesman.

Intuit, for example, will offer its ProSeries software, which is tax software designed for professional tax preparers, said Whitney MacDougall, senior manager of government programs at Intuit, San Diego.

MacDougall said the IRS accepted more than 600 of Intuit's tax preparers to participate in the electronic signature pilot program. She said the tax preparers will use a special worksheet that will enable them and the taxpayers to enter their self-selected PIN to sign or certify the forms electronically.

"This helps save time, mailing cost and managing paperwork,'' MacDougall said. "We think [the pilot program] eliminates some of the barriers to participate in the electronic program by allowing the PIN. We think it's a good thing for the tax program.''

In addition to the electronic pilot signature program, the IRS also is piloting an e-file program next summer for taxpayers.