IRS Issues Strategy to Stimulate Electronic Tax Filing

IRS Issues Strategy To Stimulate Electronic Tax Filing

The IRS this month announced 45 initiatives to encourage taxpayers to file electronically. Congress this year mandated that by 2007 the IRS must re-ceive at least 80 percent of income tax returns electronically.

A major barrier is cultural, said Ro-bert Barr, assistant commissioner for electronic tax administration. The IRS has to make the public feel comfortable with electronic filing, he said. To do that, it will begin running television commercials promoting electronic filing.

Second, the IRS has to resolve the issue of authentication. The challenge is not securing the data in transit, said chief information officer Paul J. Cosgrave, but authenticating the identity of the person sending the data.

The IRS’ Electronic Tax Adminis-tration announced the 45 initiatives in a new report, A Strategy for Growth. The list includes multiple goals the agency has set for itself:

Cut in half the time between the IRS’ receipt of an electronic return and the issuance of a refund.

Let taxpayers send more attachments to Form 1040 electronically.

Explore the feasibility of letting electronic filers include explanatory and voluntary information.

Eliminate a program that allows tax preparers to submit multiple taxpayers’ returns on magnetic tape.

The IRS must make electronic filing, payment and communication so simple, inexpensive and trusted that taxpayers will prefer it to calling and mailing, Barr said.

The service handed out its 52-page strategy at the first public meeting of the Electronic Tax Administration Advisory Committee, the independent group that Congress charged with overseeing the IRS effort.

Congress established the committee because members did not trust the IRS, said Anita Horn, member of the Senate Finance Committee’s minority tax staff. The comments from small businesses during the writing of the IRS Restructuring and Reform Act made a strong impression on members, she said.

The committee will have the dual roles of working with the IRS to offer private-sector input and reporting to Congress its views on the IRS’ progress.

"Tell us if something the IRS is doing seems wrong," Horn advised the committee. The group includes both representatives from technology companies and tax organizations. Some of the companies that have representatives on the committee sell tax preparation software. The companies have said they do not want the IRS to compete with them in the electronic filing market.

Congress will hold an annual oversight hearing each March to gauge the IRS’ progress and review the committee’s status reports.

(Reported by Government Computer News, http://www.gcn.com)