E-filing Not Cost-Free for Businesses

The Tax Executives Institute and KPMG recently released a study indicating that first-year e-filing was neither a seamless nor a costless adjustment. Of 101 executives surveyed, seven-eights incurred additional time or capital expenditures, with 40% of the 101 calling the increase substantial. Slightly over half of those surveyed had the return accepted on the first try. Most respondents were appreciative of the first-year transition rules, with seven of twelve calling for first-year transition rules to be extended for 2006. One in eight of the respondents did see a silver lining in improved filing procedures. Finally, the respondents feared significant problems with the upcoming e-filing season with many indicating the smaller firms now required to file ($10 million floor year upcoming vs. $50 million year concluded) may lack the staffing and technology of firms which e-filed this year.

There are times when one has to appreciate NOT being a partner in a CPA firm. Mandatory e-filing for tax returns definitely is one such time.