States Push Tax e-Filing as Cost and Time Saver

Stateline Midwest, a publication of the Midwestern Office of the Council of State Governments: Vol 19, No. 3: March 2010.

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The return of income-tax season has states making what has now become a standard pitch to taxpayers: File your returns electronically.

And e-filing — which saves states time, money and resources — will be especially valuable in the region’s fiscally strapped states. In Iowa, for example, budget constraints will result in “reduced staffing levels and no temporary employees,” notes Department of Revenue director Mark Schuling. As a consequence, paper filers may have to wait up to 16 weeks for their refunds. Last year, 74 percent of Iowa returns were filed electronically.

Nebraska Gov. Dave Heineman has set a goal of raising his state’s e-filing rate from 70 percent to 75 percent, the Omaha World-Herald reports. According to Heineman, the use of e-filing has already allowed Nebraska to cut in half the number of temporary workers it hires to process returns. In 2008, e-filing by Illinois taxpayers saved the state from having to process and store 10 million pieces of paper. And Indiana estimates that in 2008, it cost more than $2.3 million to process more than 1 million paper returns, compared to $150,000 to process more than 1.8 million electronic returns.

According to the Federation of Tax Administrators, many states now have e-filing mandates for professional tax preparers, including Indiana, Kansas, Michigan, Minnesota, Nebraska, Ohio and Wisconsin.