E-format tax filing is finally paperless

Associated Press

WASHINGTON — In its quest to persuade more taxpayers to file returns electronically, the Internal Revenue Service this year is making 23 more forms available in e-format and scrapping the requirement that taxpayers mail in a separate paper signature form.

"People made fun of us: 'You've got electronic filing but then you've got to file a piece of paper.' It didn't make sense," said IRS Commissioner Charles Rossotti. "This is really a major breakthrough. It makes electronic filing paperless."

The IRS is expecting 42.3 million electronic tax returns out of a total projected 129.7 million returns by Monday, up from about 35 million that were e-filed a year ago. Among the benefits: faster refunds, greater accuracy, direct deposit and debit and far less chance of further contact with the IRS.

"You're 40 times less likely to hear from the IRS if you file electronically," said Terry Lutes, IRS chief of electronic tax administration.

New this year to replace the paper signature form is a five-digit PIN number a taxpayer will select through a paid practitioner, tax preparation software or an Internet-based preparer. To prove identity, taxpayers must provide the IRS two "shared secrets" from last year's tax return: the numbers for their adjusted gross income and total tax.

"If those two things match, then we'll accept it," said Lutes said.

This "self-selected" PIN number will also replace the postcards the IRS sent last year to about 11 million e-filing taxpayers that gave them an electronic signature to replace the paper form.

Among the new IRS forms being made available electronically are those for supplemental income and loss, depreciation, wage and tax statements and farm rental income. With these additions, 97 percent of all IRS forms — and virtually every form needed by the average taxpayer — can be used in e-filing.