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IRS Oversight Board Issues Annual Electronic Filing Report; Highlights Progress and Outlines Challenges for Electronic Tax Administration

​(Washington, DC) In its Electronic Filing 2013 Annual Report to Congress, released today, the IRS Oversight Board said it is pleased by IRS progress in electronic tax administration (ETA) during the past year. The report also outlines major challenges the agency faces in creating a modern ETA environment that meets the expectations of taxpayers and tax professionals. This annual report to Congress is required by the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98).

The IRS has achieved steady progress in electronic filing since the enactment of that landmark legislation more than 15 years ago. The Board’s report finds that in 2013, the electronic filing rate for individual tax returns increased to approximately 83 percent and continued to surpass the 80 percent e-file goal originally set by RRA 98. The e-file rate for business and tax-exempt returns also increased in 2013, resulting in a combined e-file rate of around 73 percent for all major individual, business and tax exempt returns.

“I want to commend the IRS for the milestones in electronic filing it achieves year after year. This path of continuous e-file improvement is a result of management focus, strategic thinking, and bringing together internal and external stakeholders to achieve a common goal,” said Oversight Board Chairman Paul Cherecwich, Jr.

However, in the view of the Board, the precarious IRS budgetary operating environment in recent years, which includes steep budget cuts, employee furloughs, and a significant shortfall in needed funding for information technology, has precluded the delivery of more advanced electronic tax services the IRS and industry could have pursued—and which taxpayers expect in today’s technology-enabled society. The report further emphasizes that inadequate funding for the IRS punishes taxpayers in the form of less service for those who need IRS assistance and less fairness for honest taxpayers as more noncompliance, including fraud, is allowed to occur.

The Board’s report is careful to observe that not all major ETA challenges are monetary. It suggests the IRS consider developing a clear, long term vision for electronic tax administration over the next decade that includes a role for private industry, and the measures by which to gauge progress toward that vision.

“A robust and forward thinking ETA program requires a strong partnership with private industry. This has never been a go-it alone proposition; the IRS needs the private sector’s talent and expertise,” said the Board Chair. “We have repeatedly heard from stakeholders in private industry about their ideas and eagerness to assist the IRS in creating and delivering better ETA solutions and products. Through such a partnership and with adequate resources for the IRS, a world-class ETA environment is possible and within our grasp,” Mr. Cherecwich concluded.

A full copy of the report can be found at Treasury.gov/IRSOB/reports/2014/IRSOB-E-File

 
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