E-filing mandate

[Bees Knees]

The new 2009 version of TheTaxBook is out. Mandatory e-filing is covered in Tab 1. TheTaxBook makes the following author’s comment on page 1-18:

Author’s Comment: Some commentators have noted that the law
only applies to preparers who both prepare and file returns for clients.
They say a preparer who signs the return, but has the client mail the
return to the IRS, is not subject to the e-filing rules because the preparer
is not actually “filing” the return if the client mails it. However, it
should be noted that the Joint Committee technical explanation of the
law makes no mention that this rule only applies to those who both
prepare and mail the return for the client. The terms “mail” and “file”
are not the same. For example, the IRS instructions on where to file a
return say the following: “These where to file addresses are to be used
only by tax professionals filing individual federal tax returns for their
clients...” The addresses to be used apply regardless of whether the tax
professional mails the return for the client, or the tax professional has
the client mail the return. Under both situations, the tax professional is
said to be “filing” the return for the client regardless of who actually
brings the envelope to the post office for mailing.

It will be interesting to see how IRS interprets this rule.

[Snaggletooth]

The Difference

is paramount to e-filing everything versus keeping in place what we already have. If there is ANY choice between a paper return and a e-filed return, then we are reduced to exactly the status quo. Namely, the client and preparer decide how they're going to file.

If this choice is left in place, then there is no point in having the new legislation.

2-3 years ago, Alabama mandated electronic filing for all in-state preparers, as a few other states. But they allowed for exceptions. One of the exceptions was that if the taxpayer did not wish to e-file. The result for me? All of my AL clients who wanted e-file continued to do so, and all AL clients who did NOT want e-file continued to file a paper return. By allowing this exception, there was really no point in Alabama issuing the mandate.

[erchess]

Unknown Events

We are discussing events which are unknown and unknowable since they take place on and after one year from the upcoming 1/1. Now given that, is it even clear whether it will be possible to efile ALL current year Federal returns? Or will a few returns continue to be done on paper?

To totally eliminate paper we would need to be able to efile not only every single Form but in the case of forms such as Sch C where a taxpayer could have any number of them, it would have to be possible to efile any number of them. Furthermore it would have to be possible to efile a return where a social security number has already been used for the same purpose or a name and social security number do not match SSA records.

Personally I would like to see efiling a return be just like faxing something to someone in that literally any combination of text and or graphics will go. But that would defeat the purpose of efiling in the eyes of the government, which is to improve accuracy.

[Uncle Sam]

E-File Mandate

Is there an opt-out provision?
I'm from NY.
I have a few Florida clients who know nothing about e-file.
They would prefer I mail them paper returns, they sign and mail in directly.
Besides, they send me their stuff extremely late - so e-filing for them would be impractical because of the time sensitivity of rushing 8879's by deadline date.

[Bees Knees]

Obviously if the system cannot support e-filing for certain returns, there has to be a paper option. As for opting out, I would assume that could only be done at the client level. Unless the client says no, then the preparer is forced to e-file.

I remember these very same issues being discussed when Minnesota forced e-filing on us several years ago. There was talk of some preparers having all of their clients opt out to avoid having to e-file. But now that we are doing it, I know of no preparer that exists in Minnesota today who is not e-filing most if not all returns that can be e-filed. Once the preparer learns how to e-file, the controversy seems to go away.

This is all very reminiscent to the computer verses hand prepared return issue we had back in the late 1980s. The old timers refused to use a computer. Now, there is virtually nobody left that does not recognize the importance of using a computer to prepare a return, and anyone left that continues to insist on doing everything by hand is an endangered species.

[Nashville]

One Refusal

While in NC last week I had dinner with a distinguished and knowledgeable CPA friend. He told me he does not do electronic filing for his clients and is considering getting out of the tax business if it becomes necessary next year.

This is not someone who is computer-ignorant, or someone too backward to learn. On the contrary, an amazingly sharp guy. He has other sources of income, and I would think his refusal is based on a fear of electronic proliferation of client data, or electronic storage of bank account numbers and related information.

If his clientele is not allowed to opt out, our profession (and the IRS) will lose someone of value who produces complicated returns virtually error-free. (He does use software, just no e-file).

[tilt53]

[QUOTE=Bees Knees;89723]Unless the client says no, then the preparer is forced to e-file.QUOTE]

I think (hope) it's going to be easier than that. There are the returns that are rejected and forced into paper. CA provides a form for opt-out by either client or preparer. On the few that won't go through, all I put is, "Unable to e-file." I've never had it questioned.

[erchess]

Personally

I like e-filing so much that I charge extra for paper filing returns that are eligible for e-filing. If the taxpayer is allowed to opt out of e-filing little will change for me other than the fact that I suppose I will have to in some way document the taxpayer's decision. It's not fun to get a rejection but both the client and I are happier if I can fix things without changing the bottom line or slowing the receipt of any refund.

[DMICPA]

E-Filing

There is nothing wrong with e-filing but it does not fit the needs of every client. Some clients do not want to e-file. Some returns make more sense when there are schedules attached and even a broker statement or two. I know you can send them in under separate cover but I prefer to have the return submitted as complete as possible.

California has an opt out form that the client signs and does not have to give a reason. This form sits at the preparers office and never gets filed with the State.

Some returns, e filing is great, some not. We should be the ones deciding, not the government.

[fliszt]

I file

100% of my clients by efile. I too charge $25 extra for a paper return plus the MN penalty for a paper return of $5. But there has only been 1 client that choose the paper option in the past. (can't remember when). Also, I don't offer bank products since efile is so very fast. Some of the young clients want that "instant" refund but I show them how a refund in 10-15 days is so economical. I'm in business to help the clients, not the banks.
Larry

[Uncle Sam]

E-Filing Mandate

The one concept that seems to be overlooked in all this hulabaloo about e-filing - is that the government is continually shifting the filing burden from itself to tax preparers.
So we now have the administrative responsibility of FILING a client's returns in addition to merely PREPARING them.
I full well understand the cyberspace age of computerization and electronic transmission of data being more efficient, bla bla bla, but understand that the accounting/tax profession was knowledge based on knowledge, advice and skills - now we're burdened with clerical duties that are an administrative nightmare - but so long as it's off the government's back - why should they care what problems we've got?

[Black Bart]

Exactly right.

The one concept that seems to be overlooked in all this hulabaloo about e-filing - is that the government is continually shifting the filing burden from itself to tax preparers. So we now have the administrative responsibility of FILING a client's returns in addition to merely PREPARING them...

Everybody to their own taste I guess and we efile about a hundred returns a year, but I just hate 'em. Every stinkin' thing on the W-2/1099 has to be entered -- while with paper the names, addresses, ID, etc. can be omitted; just punch in 3-4 figures and that's it. Too, when I hand paper to the guy, he (not me) sends it off -- I'm through with it and no babysitting required. No worries about: getting 8879s signed and back here, or getting them to the office before Wednesday noon, or catching the drain, or did it go okay, or is it accepted/rejected? No kickbacks to analyze or IRS/client calls to make or figure out how to make it fly.

Yeah, I know I can roll stuff over, but there's nothing to roll for new cients. A minor concern you might say, but a time-consuming one that I can't really charge enough to make up for. (Actually IRS says that, don't they? That you can't charge any more for efile than paper?). And of course we'll suck it up, get used to it, and forget the extra work.

Oh well, no use beating a dead horse -- the handwriting's on the wall; Nashville's knowledgeable CPA will just have to go ahead and quit and I've got to like it or lump it.

Just once, I'd like to see IRS do something for us rather than continually tightening the screws and hatching things like that psychological profile (B Hoffman posted the link in that recent thread: "Your Tax Dollars at Work") of tax preparers which was presented at their conference and concluded that preparers are ethical bums.

[veritas]

I personally

like the e-file option but with that being said I don't like mandates from on high.

I guess some software can make the process easier. Drake has a nice feature that pulls up data for employers after typing in the Federal id number. Lacerte added that feature a few years ago.

[S T]

Efile

I also like e-file as it makes it easier for everyone and a whole lot less paperwork, but still have some clients that don't like it - so all we need is an opt out form? E-file Takes a little time to gather those 8879 - but does make the client act on immediately, if they want their refunds, and NO I don't offer RALS! paper returns take a week or two longer.

I don't like the mandate of efiling - but Calif put mandatory efile in place several years ago, and I have opted out of a lot of efiles returns for one reason or the other. - So far no problem - so I would guess other States and Federal would be the same.

I don't see it as a major concern for 2010 or 2011 - all of the government agencies have enough else on "their plates" to deal with.

And I do believe, we as tax professionals have more to deal with, such as worrying about the penalty assessments and compliance, then efile mandates.

Sandy

[erchess]

Definition of Error

I know that the reason the IRS likes e-filing is that it "reduces errors". Correct me if I'm wrong but I assume that "reduces" is being used in the everyday sense of the word.. Is there some tax specific definition of "errors"?

I find e-filing personally convenient and rightly or wrongly I think client data is safer this way than with paper filing. But the only "errors" in which I understand how there could be a reduction are the ones coming from people keying in paper returns. I can see why some errors the preparer (taxpayer volunteer or professional) makes get caught and corrected faster but I don't see why there would be fewer of them unless you just don't count the ones that lead to rejection of the return. That strikes me as perverse but then we are dealing with the government here,

Maybe part of the IRS definition of "error" is that it gets noticed only after IRS acceptance or receipt in the mail?