Mandatory IRS eFiling Is Coming

If you’re a tax preparer, get ready to efile. Mandatory efiling is coming to the IRS. For the 2010 tax year (the next tax season, in 2011), if you prepare 100 or more returns you must efile; for the 2011 tax year (tax returns filed in 2012), if you prepare 10 or more tax returns, you must efile. Clients can still opt-out (there should be a form similar to California’s Form 8454) and ineligible returns will, of course, not have to be efiled (for example, returns with over 30 W-2Gs).

What’s unknown today is what impact this will have on older tax professionals. Most of the member of OCEA use software–even those preparing just a few returns a year–but there are a few individuals who don’t. Like Robert Flach, they’ve never used software and see no reason to start today. I doubt the IRS is going to make a free e-file system available, so this could cause some preparers to either retire or drastically change their methodology.

The one certainty of mandatory efiling is that combined with requiring every professional to use an ITIN the IRS will be able to keep close tabs on preparers. Say John Doe, a tax professional, runs afoul of the IRS. The IRS can turn off his ITIN and, voila, no efiling and no more returns for Mr. Doe.

I’m not sure if we’re entering a brave new world or not, but the times are a-changin’.

One Response to “Mandatory IRS eFiling Is Coming”

  1. Russ-

    Thanks for your concern.

    I will neither retire or change drastically my methodology.

    I have responded in this coming Wednesday’s edition of the BUZZ at The Wandering Tax Pro.