Tax experts discuss ways to expand electronic filing
More citizens are relying on electronic tax-filing systems, and a panel of U.S. tax practitioners and experts on Tuesday signaled that the Internal Revenue Service (IRS) must address several issues in order to replicate that success with businesses and expand electronic services.
Members of the Electronic Tax Administration Advisory Committee, which is helping the IRS expand Internet-based tax filing and other electronic services, met to preview some of the e-filing recommendations that it plans to make in its annual report to Congress in June.
"We think what you'll see in this report ... is an ever-broadening view of electronic tax administration," committee Chairman Kevin Belden said. He cautioned that the discussion might not reflect the substance of the final report to Congress.
Generally, the committee members agreed that the IRS has made significant progress toward enabling citizens to file their income-tax returns electronically. As of April 25, nearly 51.9 million forms were filed that way, up 13 percent, or 46.9 million, last year, said JoAnn Bass, director of strategic services at the IRS' Electronic Tax Administration. By October, the agency expects to hit its target of 53 million users.
In compiling the report, committee members have been studying various aspects of the tax-filing process and suggested areas where the IRS needs to shift its focus to encourage the establishment of a fully "electronic relationship" with businesses, citizens and tax-preparation consultants.
"Some of the themes that we've been talking about is the need to focus on the value proposition for the external stakeholders," Belden said. The panel formed subcommittees to address those three perspectives.
The panel noted for example, that the report may suggest to Congress that the IRS craft guidance for business taxpayers on what kinds of electronic data will need to be retained in connection with e-tax returns. In many companies, invoices often are stored in five different databases, said Emily Lindsay, vice president of corporate accounting services of Marriott International, so companies need to know what information they need to store and for how long, in case they are audited.
Part of that effort may require the agency to adjust its IT systems to be able to accept electronic evidence along with tax returns, she added.
Additionally, the IRS may need to conduct a focus group to study why nearly 75 million taxpayers still prefer filing by paper, as opposed to the Internet or electronic means.
One reason may be that some citizens and businesses want to avoid additional data entry, panelists noted. Consequently, the group indicated that it may recommend that the IRS treat paper and electronic tax returns equally.
Panelists also suggested that the agency should consider streamlining the various authorization processes that tax practitioners must undergo in order to obtain access to data filed electronically on behalf of clients.