Before 1986. All tax returns were mailed to the IRS and entered into computers by data transcribers. They had to read tax returns that were many times still handwritten by accountants ( who next to doctors may have the worst handwriting). Next any return that didn’t not meet certain tests were sent to an error correction department. The list of steps goes on and on. But with electronic filing those steps are removed. It has been estimated the IRS saves over 3 dollars per return processed which multiplied by over a 100,000,000 returns per year amounts to substantial savings.The IRS also increases revenue because of increased compliance and faster review capabilities.
1986: Initial filing season pilot with 5 tax preparers in 3 cities; 25,000 returns filed. The program could only accept simple returns that were due a refund.
1987: Pilot expanded to 7 cities; 78,000 returns filed. Direct Deposit was added as a benefit.
1988: Pilot expanded to 16 IRS districts; 583,000 returns filed. The Form 1065 (partnerships) and Form 1041 (trusts) are added to the e-file list.
1989: Pilot expands to 36 states; 1.1 million returns filed.
1990: E-File expands nationwide; 4.2 million returns filed.
1992: Telefile pilot debuts for 1040-EZ filers to e-file via telephone. The IRS begins to accept individual tax returns where tax is owed and checks can be mailed via paper voucher.
1998: Congress passes IRS RRA 98 containing a provision setting a goal of an 80 percent e-file rate for “all federal tax and information returns.”
1999: Electronic payments through credit cards or direct debit introduced; IRS pilots alternative programs to allow taxpayers to sign returns electronically instead of mailing a signature form.
2002: IRS allows taxpayers to sign e-file returns using a Personal Identification Number (PIN) which made the e-file process entirely paperless.
2003: Free File debuts; IRS partners with Free File Alliance, a consortium of tax software companies, to make free tax preparation software and free e-file available to most individual tax payers. In a major step for businesses, e-file is expanded to the quarterly Form 941 for employment taxes and the annual Form 944 for small businesses.
2004: Modernized e-File (MeF), the next generation of IRS e-file, makes its debut, accepting business and information returns such as the Forms 1120, 1120-S and 990 series.
2005: E-filed returns cross the 50 percent threshold; 68.4 million returns filed. Telefile ends after years of declining use as users migrated to tax software and e-file..
2006: MeF becomes mandatory for businesses and exempt organizations with assets of $50 million or more.
2007: MeF threshold for businesses and exempt organizations lowered to assets of $10 million or more.
2009: Congress passes a provision requiring tax preparers who file more than 10 individual tax returns to file electronically; IRS phases in the requirement, setting the threshold at 100 or more for 2011 and 11 or more for 2012.
2010: MeF begins a roll out for the Form 1040 series and 23 related forms which will take three or more years to make all the related forms available; IRS stops mailing paper Form 1040 packages.
2011: E-filed returns cross the 100 million threshold in one filing season; cumulative total exceeded 1 billion returns. Approximately three out of every four individual tax returns were filed electronically.
2012- 2013: In 2012, almost more than 119 million individual tax returns were efiled. For 2013, the IRS has reported that more than 122 million returns were efiled. This was 80% of all returns filed.
<p “=””>2014: 86% of the total returns received were electronically filed. .<p “=””>2017: The IRS has estimated 92% of individual returns will be efiled.<p “=””>Corporate and partnership returns have seen similar gains ( over 80% of all corporate and partnership returns are estimated to be efiled his year) .