Forced Electronic Filing

[Golden Rocket]

Tennessee, under new regulations written by typical lawmakers, has just now (January 1) mandated that ALL taxes be filed and
paid electronically. A paper return will be rejected. (They don't tell us what they will do with a check if it is enclosed - somehow
I doubt the check would be rejected)

Where the BIG problem comes in is the person doing the filing is rarely EVER the person doing the paying. For example, I file about
25 Hall tax returns every year, and don't have access to ANY funds whereby to release. And I am certainly not going to assume
signature authority for ANYone considering the liability that comes with that privilege.

For businesses, the problem continues. Often the person filing a sales tax return, a corporate return, or any of the various taxes in
Tennessee will NOT be the person authorized to approve or disburse payments.

What I foresee is thousands of tax returns of various types being filed on paper, and even though the state says they will not accept
them, they will be forced to accept them from sheer numbers or else do without.

Has this happened in any other state??

[Koss]

Ohio Sales Tax

Ohio pretty much requires electronic filing and payment of sales tax. I don't know whether a paper return would actually be refused. But paper forms are simply not available anymore, except for earlier years.

The online platform does have an option to file the return electronically without payment. The taxpayer can then mail a check, or they can make the payment electronically in a separate transaction, at a later time.

That may well be possible in Tennessee, too. What if the taxpayer simply doesn't have the money? (That never happens, right? )

Is the state actually going to take the position that you can't file the return without payment? Not likely. There should be a way to go in and make the payment later.

BMK

[Maribeth]

Washington State requires electronic filing of its returns also. When you set up the taxpayer's account, you have the option to indicate a bank account for the payment to be taken out of. You also have the option to electronically file the return and then send a check with a payment coupon.

I would not go back to paper filing. Electronic filing & payment is so much easier.

[Golden Rocket]

Not entirely Bad

The whole Tennessee thing is not entirely bad. Last year they introduced electronic filing, and you could file the return, and send the client a coupon.
The client could then either use the coupon or pay the State with electronic banking.

This year they have got the tax software people to fix the state tax return such that you absolutely cannot complete the electronic filing portion unless
you also pay them in one fell swoop. Not very smart. They will end up with hundreds of thousands of Hall tax returns on paper this year because
preparers do not have access to funds at the time of electronic filing.

Many people I know refuse to pay bills electronically because of putting their account information online and allowing identity thieves to nab it.
I am one of those people myself. Of course, I have several companies begging me to pay them electronically instead of mailing them a check,
but the conversation abruptly ends when I counterpropose that they assume 50% of the liability in the event of identity theft.

[John of PA]

It's just a matter of entering bank information, like you do for direct deposit of a refund. Bottom Line, it takes less energy to embrace technology than it does to fight it.

[Koss]

Bank Info

John of PA wrote:

It's just a matter of entering bank information, like you do for direct deposit of a refund.

I'm not sure it's that easy. First of all, entering data for direct deposit does not involve withdrawing funds from the taxpayer's bank account. The analogy you are reaching for is entering an RTN and DAN for an electronic payment of a balance due on Form 1040.

But I'm not sure that entering such data on an electronic state tax return is the same thing.

For a balance on Form 1040, the electronic payment is explicitly authorized by the client's signature on Form 8879, and it is a one-time transaction. The authority of the tax pro to enter the data is controlled entirely by the language on Form 8879.

In some e-file systems for state sales tax, the language used by the system effectively requires the party submitting the return to state that they have signature authority over the account that is used for payment.

Some systems allow the taxpayer to set up the online account, and then delegate authority to file returns to a third-party preparer, so that may work in some cases.

But I can understand why, in certain circumstances, a tax pro would not feel comfortable submitting the return with payment. If you are not using a third-party login, you are effectively impersonating the taxpayer.

BMK

[Snaggletooth]

I'm not going to do it

Very much of the mindset described by Koss.

I am not going to ask any customer to give me signature authority over their bank.

With the liability associated with this, plus the absurd nature of such a request, I guess the
time will come for me to quit.

[Snaggletooth]

Relaxed the Requirements

Since this thread was started, State of Tennessee has seen how ridiculous their requirement was. They are now
ACCEPTING electronic filing, and encouraging residents to follow up on payment by using their website. They WILL
take a check, and are even accepting cash at state offices.

An political analyst once said, "The best way to get rid of a ridiculous law is to try and enforce it."

[ATSMAN]

MA forces even small employers to file their employment taxes electronically. There is a $100 fine and one of my clients paid it for a year until he got tired of requesting for a waiver!