ETAAC report addresses IRS shortfalls, recommends future plan

The Electronic Tax Administration Advisory Committee (ETAAC) has issued its annual report to Congress providing information about the IRS's progress in furthering electronic tax return filing. The ETAAC was formed in 1998 for the purpose of analyzing and providing feedback on the development and implementation of the IRS's electronic tax administration strategy.

The report notes that the IRS is receiving favorable responses to its Web site redesign and in particular to certain features, including:

  • "Where's My Refund" – a feature that enables taxpayers and tax practitioners to check the status of tax refunds

  • IRS withholding calculators

  • Employer identification number requests

  • Transcript delivery request options

  • Online registration features

    The ETAAC report includes recommendations for accelerating the growth of e-filing and for facilitating the delivery of electronic services. Among the ETAAC recommendations are the following:

  • E-file mandates for practitioners filing more than 50 individual income tax returns annually

  • Lowering e-filing threshold to include corporations with assets under $10 million

  • Lowering e-filing threshold for partnerships from 100 partners to 10 partners

  • Mandating e-filing for employment tax returns

  • Lowering the e-filing mandate for W-2 forms from 250 to 10

  • Establishing an e-filing threshold of 10 statements for 1099-MISC forms and providing an on-line process for uploading this information

  • Invest in marketing the Free File program in an effort to reach more eligible taxpayers

  • Improving the rejection rate of electronically filed income tax returns by developing a system that checks for correct Social Security numbers and other validation measures before the return is submitted.

  • Tighten Electronic Return Originator (ERO) suitability standards to include criminal background checks, credit reporting, and citizenship and residency requirements

  • Improve ERO management and oversight

    In the IRS administration section of the ETAAC report, recommendations include addressing taxpayer barriers to e-filing, investing in better technology, improving accountability, and delivering e-services that meet the needs of end users.

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