The IRS should extend its goal to have the overwhelming majority of income tax returns filed electronically from 2007 to 2011 to extend the benefits of the momentum it has created, the IRS Oversight Board recommended today.
The IRS was to have at least 80 percent of tax returns e-filed by 2007 under the IRS Restructuring and Reform Act. In 2005, almost 52 percent of returns were e-filed.
“The congressionally mandated e-filing goal has exerted a powerful effect on the tax administration community and on the IRS,” said IRS Oversight Board chairman Raymond Wagner Jr. in a statement.
The IRS could meet the 80 percent goal by 2011 if current trends continue, the board said. No other goal has had such a profound effect on tax administration, the report added.
“Its visibility and clarity galvanized the IRS and its stakeholders into action and resulted in changed behavior by taxpayers, tax preparers and tax software companies, among others,” the board said in its report.
The board disagreed with a recommendation from the Electronic Tax Administration Advisory Committee, a public forum that airs tax issues, to move fiscal 2010 funds to 2008 so that the IRS could speed up implementation of e-filing of the popular 1040 forms under the Business Systems Modernization program.
IRS must continue to migrate taxpayer records from the legacy Master File to the modern relational database, the Customer Account Data Engine. But the IRS has established a baseline for program evaluation and should stick to this disciplined process “for the well-being of the BSM program,” according to the board.
The board praised the IRS for promoting e-filing and a broad array of electronic transactions, but more is needed for taxpayers to perceive the IRS as having services on par with financial institutions, which provide customers with daily account updates and immediate access to records.
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