This post was authored by Lizetta Staplefoote, Creative Writer at Rackspace.
Many of us don’t remember a time when e-filing didn’t exist. However, there was a time when big corporations had to deliver huge paper returns via 18-wheeler and the only option for your refund was a paper check in the mail – months after filing. Take a look at the impact cloud computing has had on tax filing.
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The IRS has been tracking the rate of electronic filing for individual tax returns since the inception of e-filing in 1987. This IRS long-term goal is somewhat broader and measures the percentage of all major tax returns filed electronically by individuals, businesses, and tax exempt entities. Major tax returns are those in which filers account for income, expenses, and/or tax liabilities. The goal is for 80 percent of all major tax returns by individuals, businesses, and tax exempt entities be filed electronically by 2012.
Top 5 Federal E-filing States:
Big Benefits of E-filing:
On average, the IRS processes 1.5 million sheets per day, 10.6 million sheets per week, and 46 million sheets per month will be scanned. According to estimates, there are 8,333.3 sheets of paper per tree. Going completely paperless would save 5,520 trees saved per month. If every taxpayer e-filed, that would save another five billion sheets of paper or 600,024 trees.
Because e-filing is paperless and builds error checking into the filing process, the error rates and processing times on digitally filed returns plummet. On paper, 20% of returns have errors and take about 6 to 8 weeks to process. Electronically filed returns have 2% error rate and take a maximum of 8 days to process.
Paper returns cost $3.29 each to process.Electronically filed returns cost $.19 to process. The majority of the cost difference is in the human intervention, with more than 5,000 data transcribers added during peak processing, required to scan and enter paper returns. By implementing the Compliance Data Warehouse (CDW), an integrated database for research and analysis, the IRS was able to cut the time to load a year’s worth of returns (15TB to 20TB) from six to eight weeks to four hours.
The IRS attributes savings of $26.32 million in processing costs to the decline in paper returns and increase in e-filed returns.
There’s an app for that too!
Where’s My Refund app reduces calls to the IRS call centers and is a first step toward the possibility of filing on your phone like many Scandinavian countries already do.
Data Stores by Agency:
Census Bureau = 2.5 PB
State Department = 10PB
IRS Data Warehouse = 100TB
Congressional Budget Office = 5TB
DISCLAIMER: Web hosting technologies used for tax filing have not been verified by the IRS.