IRS' e-file program gaining users

Chances are, you filed your federal taxes electronically this year.

According to the IRS, about two out of every three individual taxpayers elected to e-file in 2009, up almost 6% from returns filed electronically in 2008. That works out to just a few million returns shy of 100 million individual returns, or 67% of tax returns.

It's a pretty incredible increase for the IRS e-file program which began just more than 20 years ago. In 1986, the first year of the program, just 25,000 refund-only returns were accepted in three locations, less than 1% of the returns filed in 2009.


The uptick in e-filers is a welcome trend for the IRS, having made increased percentages of e-filers a primary goal. Those numbers put the IRS a few percentage points closer to meeting a goal set by Congress of 80% by 2007, which the IRS didn't quite meet.

The 80% threshold was created under the Internal Revenue Service Restructuring and Reform Act of 1998, which states in part (link will download as a pdf):

Paperless filing should be the preferred and most convenient means of filing Federal tax and information returns, [and] it should be the goal of the Internal Revenue Service to have at least 80 percent of all such returns filed electronically by the year 2007.

On its Web site at www.irs.gov, the IRS cites a number of reasons to file electronically such as:

1. Faster refunds. The IRS is able to process electronically filed returns at a faster rate, which means that refunds may be returned to taxpayers sooner. If taxpayers opt to combine e-filing with direct deposit, the IRS estimates that those taxpayers will receive their refunds a week sooner than those receiving a paper check.
2. Greater accuracy. Math errors are often cited by the IRS as one of the top filing errors committed. Filing electronically with returns prepared by a tax professional or using tax software tends to eliminate math and other errors with accuracy checks. The IRS claims that returns which are e-filed have an error rate of less than 1%.
3. No paper return to mail. This one is easy -- no waiting in line at the post office, no misplaced letters and savings on a stamp or two.
4. File now, pay later. The deadline for filing and payment of taxes is April 15. With e-file, you can file early and simply mail your payment by April 15 (Why get rid of your money a moment sooner?) or pay via credit card.
5. Quick confirmation. With e-file, you receive a confirmation of filing via e-mail -- and an alert if there's a problem with the transmission of your return. You won't get that using the post office.
6. Convenience. E-file is accessible 24 hours a day, seven days a week. No waiting for appointment hours.

It's clear that e-filing is the preferred method by the IRS of filing for taxpayers. And why not? It makes their lives much easier. But here's the good part: it makes your life much easier, too.