Mar 29, 2011

Electronic Filing Becoming the Norm

If the IRS has its way, paper tax returns will soon become a thing of the past.

If your return is put together for you by a "specified tax return preparer," get ready to step into the 21st century and start "e-filing," if you haven't already.

A "specified tax return preparer" is a preparer of 100 or more "covered returns" in calendar year 2011 (11 or more in 2012 and thereafter). And a "covered return" is any return of income tax imposed by subtitle A of the Internal Revenue Code on individuals, estates, and trusts, such as Forms 1040, 1040A, 1040EZ and 1041. (Some forms cannot presently be e-filed and are, obviously, exempt from these requirements. But the forms generally filed by most individuals are covered.)

But what if you don't like the idea of e-filing? Say, for example, you're a little goosey about computer security -- a reasonable position to take. What does your preparer do in that event?

Well, it really shouldn't be a problem for him or her. Your preparer has to simply document your choice to file in paper format, and retain a signed statement from you to that effect, including a representation from you that your preparer did not attempt to influence your decision to go with paper filing. Also, your preparer will attach Form 8948 ("Preparer Explanation for Not Filing Electronically") to your paper filed return.

And what if your return is more complicated than most, which often necessitates any number of documents (other than the government forms themselves) to be attached in support of tax return items. Well, there's an "out" for your preparer in this area as well -- an "administrative exemption" to use the IRS's very own words. In this instance, paper filing is acceptable. And some returns can be e-filed and the attachments mailed to IRS using a transmittal Form 8453.

Get more information from Nolo on getting your personal income tax and business tax returns together.