WASHINGTON -- The Internal Revenue Service, tired of shuffling mounds of paper, hopes to triple the number of taxpayers who file income taxes electronically by 2007.
"The majority of returns today are still filed on paper," IRS Commissioner Charles Rossotti told an advisory panel.About 20 percent of taxpayers, or 24.6 million, filed electronically this year. That amounts to a 28.4 percent increase over last year, but IRS officials fear progress might slow without technological improvements and products that have broader public appeal.
The IRS, which hopes to reach 80 percent electronic filing by 2007, is pushing electronic filing because it reduces errors, speeds processing time and provides better security for private information. For the taxpayer, refunds can arrive in half the time compared with paper.
The agency is taking several steps next year to increase electronic filing, including tax payment by credit cards.
It also is conducting two pilot projects enabling taxpayers to substitute personal identification numbers for signatures, eliminating the need to sign returns in ink. The signature requirement has forced many people who use computers to do their taxes to print them out and then mail them in. One interim IRS goal is to have all returns prepared this way filed electronically by 2001.
The agency plans to send 12 million PIN codes to taxpayers who prepared their returns with computer software last year. In addition, 8,100 paid tax preparers have been selected for a program allowing taxpayers to pick their own PIN code to "sign" their returns.