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SYNOPSIS: The Internal Revenue Service Restructuring and Reform Act of 1998 (the Act) places a heavy emphasis on electronic filing (or e-filing). Here we focus on the IRS's strategy, in response to the Act, for reaching an 80-percent level of e-filing by the year 2007. In this paper we ask the question: Given the current level of acceptance, is this is a realistic goal for individual taxpayers? We address this question through a discussion of the current elements of the electronic-filing process. Additionally, we apply technology-adoption literature to map out the current progress and techniques required to facilitate the adoption of e-filing. We conclude that, given the nonmandatory nature of the change, it is unlikely the 80-percent-adoption level will be reached for individuals by the year 2007. However, it appears that there are some avenues available to the IRS and Congress to further increase the usage of electronic filing.
INTRODUCTION
The Internal Revenue Service Restructuring and Reform Act of 1998 (hereafter the Act) requires the Internal Revenue Service (IRS) to change the way it approaches many aspects of its mission. One specific area emphasized is electronic tax administration. The Joint Committee on Taxation, in its explanation of the legislation, states: "The Congress believed that the implementation of a comprehensive strategy to encourage electronic filing of tax and information returns holds significant potential to benefit taxpayers and make the IRS returns processing function more efficient" (Joint Committee on Taxation 1998). The Act provides a long-range goal of having at least 80 percent of all Federal tax and information returns filed in electronic form by the year 2007.1 Congress's ambitious goal raises the question: Is it possible to achieve this level of acceptance in the given time period? We address this issue for the primary tax return target group, the individual taxpayer.2 Our analysis proceeds through a discussion of the elements of the IRS's electronic-filing initiative, the technology adoption life cycle, and an application of this technology-adoption framework to the IRS's own data regarding electronic filing during the 1999, 1998, and 1997 filing seasons.
Due to the short time frame (eight remaining filing seasons) and electronic filing's current position in the technology adoption life cycle, it is unlikely that the IRS will meet the 80-percent goal...