• Acknowledgement of e-filed returns is immediate, and documented through a receipt.

• Many state and federal forms may now be e-filed together, using only one transmission.

• TeleFile users are able to access the toll free service 24 hours a day, seven days a week.

• Errors made on e-filed returns are more easily caught and quickly corrected; additionally, in the past several years, less than one percent of e-filed returns have contained errors, as opposed to a 20-21 percent error rate for paper returns.

• E-filed returns are received and processed faster, which allows for prompt refunds. If the Direct Deposit option is utilized, refunds can be distributed even faster.

Many clients of accounting firms, for example, have a higher income on average and are better money managers in general. They do not need the refund money, and so the promise of a refund within two or three weeks does little to motivate them to request electronic filing. Another group not particularly motivated to use some form of electronic filing are those with taxes due. The reason is obvious.

Other Considerations
Aside from saving the taxpayers time and money, the government is looking out for itself as well. E-filing means:

• A decrease in paper.

• Less storage space is needed.

• Fewer people are required to handle processing.

• The IRS still has no plans to offer professional preparers monetary incentives for electing to file electronically.

• Charging an extra fee for filing a return electronically does not necessarily mean an increase in profit.

• Computer-generated forms, as a transitional step to total electronic filing, can raise costs and stress levels if correct procedures are not followed. Make sure the forms you plan to use adhere to the specifications required by each particular state or federal agency.

• Do not photocopy any computer-generated form you plan to file; most likely, the form will be rejected because the automated scanner will be unable to read it.

• Be sure to use the correct font when filling out the form: what was accepted in the past may not be accepted now, so be alert.
  
• Do not overly rely on the expertise of those who supply your tax software and forms when it is a question of compliance. Informing yourself in regards to new standards and processing requirements is in your and your client's best interest.

The goal of the IRS is that 80 percent of all tax returns be electronically filed by the year 2007. With the growth e-filing has seen in just the last year, this goal may well be reached. Mandatory enrollment in electronic payroll deposits is already an approaching reality for some employers, and may be required by all taxpayers in the future. With this in mind, it is certainly in the tax professional's best interests to go with the flow and strive to make electronic filing attractive to clients.