Tax accountants who prepare federal tax returns have been required since 2010 to submit most returns electronically, including those completed for individuals, trusts, and estates. At PSTAP, we encourage PA accountants, CPAs, and tax preparers to use all the online opportunities the IRS offers in order to expedite service for their clients. The IRS is currently expanding its ability to receive documents electronically, both from tax preparers and individuals, in order to get out from under a tsunami of paperwork that has exploded in recent years.
Paper has always been a problem for the IRS, but since the shutdowns, the backlog has become huge because of extra documentation required by the various federal programs created to keep the economy afloat and small companies in business. So now the IRS is expanding opportunities for individuals to file, submit documents, and communicate with the agency electronically.
The greatest benefit of online communication is improved turnaround time. At the beginning of 2022, the IRS had a backlog of 4.7 million individual tax returns, in addition to millions more business returns. The more stress people are under, the more likely they are to make mistakes. The more often people have to “touch” a piece of paper, the more likely they are to make mistakes. These touches include manually entering information, looking back at it for confirmation, hunting for it on a messy desk, filing it in the appropriate place, passing it on to the next agent if needed, etc.
As accountants, we know what it’s like to have to deal with a lot of paperwork. Multiply that by many factors for the IRS agent and we can have at least a little sympathy for their plight. We should encourage our clients, both individuals and businesses, to consider using the IRS’s online options as often as possible, for faster service and less risk of error.
Your clients who are uncomfortable with working online will continue to have the option to submit their tax returns manually; however, inform them that they should expect a delay in receiving any refund.
The IRS will continue to expand opportunities for individuals, tax preparers, accountants, and CPAs to communicate with the IRS online rather than by paper. It also expects to digitally scan all incoming forms by 2025, eliminating the need for agents to manually enter data. This should help to dramatically alleviate the backlog and prevent future paperwork overload.