The Internal Revenue Service (IRS) Oversight Board released its Electronic Filing Annual Report to Congress on Monday and acknowledged that the IRS will not meet the goal of 80 percent of all returns filed electronically mandated by the IRS Restructuring and Reform Act of 1998. The Board credited the 2007 deadline with pushing the IRS to increase the number of taxpayers who e-file their returns to 52 percent in 2005, and projects, based on their analysis of current trends, that four out of five taxpayers will file electronically by 2011. The Board recommends that the target of 80 percent be kept, but that the target date be extended to 2011.
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The IRS Oversight Board Electronic Filing Annual Report to Congress available at www.irsoversightboard.treas.gov uses recommendations made in the Electronic Tax Advisory Committee’s (ETAAC’s) annual report released late last year as a foundation for its broad recommendations, noting that it regards the ETAAC as an expert resource and does not wish to duplicate its effort.
The ETAAC’s 2005 report presented a vision “where electronic tax administration acts as the primary mechanism for transforming the IRS and how it serves taxpayers,” the Oversight Boars’ report says. The ETAAC identified three issues that must be addressed by the IRS to build a system to meet the needs of all taxpayers:
- There must be easy, secure access to the system for all stakeholders. They must be assured their data is “secure and that access is limited to those authorized to view the information.”
- The IRS and each state jurisdiction must work with software providers so as to provide a “seamlessly integrated experience for each taxpayer to file, pay, store and retrieve information.”
- All transactions associated with filing, paying, storing and retrieving data . . . must be electronic.
The Oversight Board Annual Report supports the ETAAC’s vision in the first two issues, noting that there may be a correlation between those states mandating e-filing and the growth in federal e-filed returns, but recommends that the third goal be re-evaluated because some taxpayers may not have computer literacy or access to computers and may not be able accomplish e-filing.
The Board also stressed that the IRS must make solid progress in replacing the IRS legacy master file system and move taxpayer records to the modern reliable database called the Customer Account Data Engine (CADE).
The ETAAC report identified three areas it considers barriers to full acceptance of e-filing including:
- The IRS’ legacy system.
- E-pay. It must be faster than paying by check. Sign-up for the Electronic Federal Tax Payment System should be instantaneous.
- E-services should be “faster, easier and more efficient that paper, telephone or fax-based communications.”
The Oversight Board recommended a review of the ETAAC’s IRS Legacy system position but supports their suggestions for e-pay and e-services.