On April 15, TV news crews will converge on designated late-night mailboxes to ask procrastinating tax filers why they waited until the eleventh hour to get their midnight postmark. Their answers will be predictable. What's remarkable is these live hits are chronicling the tale of a minority -- taxpayers who file using paper and postage stamps.

Last year, the IRS received nearly 58 percent -- or 90 million -- of all returns electronically. About 27 million of those were filed electronically from home computers.

E-filing has been the IRS's Holy Grail for more than a decade. The 1998 IRS Restructuring and Reform Act codified a goal of 80 percent of returns filed electronically by 2007. The agency is behind by 22 percent and two years late.

The stakes are higher than they may first appear. The legitimacy of the U.S. tax system depends on the level of voluntary compliance -- and promoting e-file adoption is key to easing compliance.

In 1986, when e-file began, the IRS received only 25,000 returns via modem from a few third-party preparers.

View Full Story
Paul W. Taylor  |  Contributing Writer