Employer electronic filing program.

• Author: Fedastion, Marquesa
• Position: Tax filing

For nearly forty years, the Internal Revenue Service conducted business in essentially the same way. The structure and process served the federal government and taxpayers well for decades, but they no longer meet the challenges of today's environment. One of the strategies designed to help meet these challenges is Tax Systems Modernization (TSM). The Electronic Filing (ELF) Program is the first IRS program to become operational under the TSM effort. The program has grown rapidly--from 25,000 electronically filed individual returns in 1986 to nearly 12.5 million during the 1993 filing season.

Electronic filing is the wave of the future, and the IRS wants to give as many people as possible the opportunity to participate in this innovative new way of doing business. The IRS's Employer ELF Program allows employers to offer electronic filing as an employee benefit. Following are program highlights,as well as several points that employers may want to consider when determining if they would like to participate in the program.

Advantages for Employees

Taxpayers can benefit from the higher accuracy rate of these returns since there are built-in validity checks in the tax preparation software. Taxpayers also appreciate receiving a quicker refund, the option to use direct deposit, the satisfaction of IRS acknowledgement of the receipt of their return, the ability to file a combined Federal/State return in some states, and if they owe taxes the ability to use a "File Now, Pay by April 15" approach.

Employers can help employees take advantage of these benefits by offering electronic filing as an employee benefit.

Benefits for Employers

There are several benefits the employer can enjoy by offering this program to employees. Primarily, electronic filing has a lower cost than other employee benefits such as daycare and fitness centers. The hardware and software costs of participating in the program are deductible as an ordinary and necessary business expense, and existing computer equipment can be used. In addition, electronic filing is considered a de minimis fringe benefit by the IRS, so its value need not be included on an employee's Form W-2.

Participation in the program can also help to improve a company's image in the community as being innovative through the use of technological advances and environmentally conscious by supporting a reduction in paper usage. Employers can help to boost the morale of employees by helping them to meet their tax...