ETAAC Makes Recommendations to Congress, Including Mandatory E-Filing

The Electronic Tax Administration Advisory Committee (ETAAC) has submitted its 2009 annual report to Congress, in which it reported that do-it-yourself e-filing by individual taxpayers increased 19% from 2008 to 2009. However, e-filed returns by tax preparers were down 1%. Overall, the committee estimates that for major form types, 59% of returns were efiled in 2009.

In its report, the ETAAC makes 10 recommendations to help the IRS achieve the goal mandated by Congress that 80% of all tax and information returns be e-filed. The number one recommendation is that Congress give the Service the authohhrity to mandate e-filing by any return preparer who files more than 200 returns. The committee estimates that this would result in 16 million additional e-filed returns. (Under Sec. 6011(e)(1), the IRS currently cannot mandate e-filing for any individual, estate, or trust.)

The target date for the original 80% e-file goal was 2007. The ETAAC recommends extending that target date to 2012.

The ETAAC also recommends closer cooperation between the IRS and the tax software industry. They recommend that the Free File Alliance program be extended and that the paper signature requirement for information sharing with state tax authorities be eased.

The 14-member ETAAC was created by the IRS Restructuring and Reform Act of 1998, P.L. 105-206, to provide feedback to Congress on electronic tax administration by the IRS. It reports annually on the IRS’s progress in meeting the goal of 80% electronic filing of tax and information returns (and legislative changes that would help the Service meet this goal), the IRS’s e-filing strategic plan, and the effects e-filing would have on small businesses and self-employed taxpayers.