Electronic Filing Outweighs Paper System

It seems that at long last, electronic filing has caught on with a fury, what with the surge of online filing at Kiplinger, H&R Block and Quicken Web sites, as well as sending returns directly to the electronic IRS. Still, clients may ask CPAs and accounting professionals for advice as to why electronic filing has its advantages.

The IRS has set an ambitious goal of having 80 percent of all individual tax returns (not corporate) filed by 2007. The rate currently is about 25 percent (not including the current tax season).

Reducing costs is the primary reason according to the IRS, who say they need fewer clerks to keypunch paper-based returns if more of us filed electronically. Refunds will come in what the Service estimates as half as much time rather than filing on paper, and taxpayers will receive an e-mail confirmation that their returns were initially received.

Bob Barr, assistant commissioner, says that electronic returns also tend to more accurate; those on paper may have error rates as high as 20 percent.

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