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ETAAC: IRS Must Cut Paper Use

PaperThe Internal Revenue Service must take steps to cut the amount of paper documents it must handle. That summarizes a recommendation of the Electronic Tax Administration Advisory Committee in its annual report to Congress.

In its recently released report. ETAAC identifies several areas for work to reduce paper returns and communication "In our view, paper backlogs are the tangible byproduct of the current suboptimal balance between IRS technology and its workforce,” the committee concluded.

Besides needing more financial support from Congress, the IRS should expand e-filing and electronic submission wherever possible, especially the largest remaining area of paper submissions, individual tax returns.

Although more than 90 percent of 1040s are efiled, there are still almost 20 million individual returns submitted annually, with a typical error rate of 40 percent to 50 percent. The rate for electronic submissions is 3 percent.

ETAAC said the IRSt needs a better understanding of the error rate and the reasons taxpayers still use paper returns and remove barriers to their switching from paper. That also reduces costs as the per-return cost of filing a paper 1040 is $15.21 versus 38 cents for efiled ones.

With about 50 percent of paper returns, taxpayers attempted to file electronically, but the returns were rejected because of errors. The IRS needs to rethink processes and polices to enable taxpayers to authenticate themselves to solve the most common problems with Online Accountants one of the “promising vehicles” for this, the committee said. 

The 94x Series is the second largest source of paper returns, more than 17.5 million in 2021 About 55 percent of these returns were efiled in fiscal 2022 with amendments being filed only via paper.

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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