IRS Oversight Board says 80% e-file goal will not be met.

• Author: Nevius, Alistair M.

The IRS Oversight Board released its Electronic Filing 2010 Annual Report to Congress and concluded that the goal that 80% of all major tax return types be electronically filed will likely not be met by 2012.

The 80% e-file goal was originally implemented by the IRS Restructuring and Reform Act of 1998, P.L. 105-206, and at that time the goal was for 80% of all individual returns to be e-filed by 2007. The goal has subsequently been expanded to include all major individual, business, and exempt organization tax returns, and the target date has been moved back to 2012.

The report notes that there has been steady progress in increasing the rate of electronic filing of various tax return types, but the overall e-file rate for major tax returns in 2010 was 59%, leaving the IRS well below its goal with two years to go.

For individual returns, the e-filing rate was approximately 70% in 2010, and the report notes that this rate was probably reduced by the fact that taxpayers claiming the first-time homebuyer credit had to file their returns on paper.

Because of the recent mandate that requires e-filing of individual returns by most return preparers, the report estimates that the e-file rate for individual income tax returns may exceed 80% by 2012; however, the board believes the overall rate for all major tax returns combined will likely be not much higher than 70% because the e-filing rates for business, tax-exempt, and employment tax returns are far lower than the...