Don't Mess With Taxes

In 2009, the Internal Revenue Service electronically processed nearly 95.5 million individual tax returns, or roughly two-thirds of all individual tax returns filed that year, according to a Government Accountability Office (GAO) study issued in March 2011 on ways to improve electronic tax filing.

In compiling that report, the GAO also noted that the IRS estimated that each e-filed return amounted to a saving of $3.10.

That's enough to still get a small cup of coffee in some places. And it is definitely enough to qualify as this week's By the Numbers figure.

The precise price comparison is $3.29 to process a paper return vs. only 19 cents for processing an e-filed Form 1040.

If all of 2009's tax returns had been electronic, noted the GAO, the IRS could have saved about $148 million in processing costs for that year alone.

Increasing e-file savings: As the IRS has expanded and apparently improved its e-operations, Uncle Sam's savings have grown steadily over the years.

The year before the GAO report, another government agency also commented on how electronic tax filing is better for the country's bottom line.

A few years ago, the Treasury Inspector General for Tax Administration (TIGTA) examined IRS efforts to modernize paper tax return processing. That September 2009 TIGTA report noted that IRS data from 2008 showed it cost the agency 35 cents to process an e-filed tax return versus $2.87 to deal with a paper-filed tax return, or a $2.52 difference.

So in one year, the IRS savings via e-filing increased 58 cents per return.

So maybe IRS Commissioner Doug Shulman wasn't too far off the mark when he declared last summer that "an e-file return costs us 20 times less to process than a paper return."

And those kinds of savings mean that the IRS will keep urging, encouraging and probably eventually forcing us all to e-file our taxes.

You also might find these items of interest:

• Federal e-filing history now includes more than
  1 billion taxpayers served
• Real time tax talk
• IRS electronic future