Is It Really Better to E-File?

This woman out-smarted the IRS, TurboTax, and Visa...for a 1999 Dodge Caravan.

2011 broke the record for tax fraud cases, and it's seeming likely that 2012 will leave that record in the dust. Every time I get on the internet, I find article upon article about how people are so easily claiming refunds they haven't earned online. Most of them seem to be getting away with it too. What is the IRS reaction to this? It added 40 more employees to the department that looks into these cases. 440 people in the entire country are now responsible for the astronomical tax fraud cases the IRS is currently completely failing to manage correctly.

A lot of questions keep circling through my head. How come the IRS punishes the victim of Florida penitentiary inmates claiming her refund, instead of finding a way to keep Florida inmates from filing returns at all? How come a woman can claim a $2.1 million tax refund she didn't deserve, and not get caught until she reported her TurboTax refund card missing? How come it is SO unusual that a tax scam case is solved (and not by the IRS, I might add) that articles with heavy tones of awe and disbelief explode all of the internet? With all of these stories I keep hearing, is it REALLY better to e-file?

The IRS tells us that it is easier, faster, and safer to e-file your tax returns. But, is that really the truth of it? Let's discuss each of the three reasons the IRS recommends that you e-file your tax returns.

1. It's Easier to E-File

I will agree that punching in answers to questions that are phrased in plain English, instead of legalize is easier. But, that is about it. I cannot tell you how many times I have been told by my clients that they went the e-file option, and their tax return was screwed up. This includes IRS authorized e-file providers. But, the IRS states on their website that...

IRS e-file returns are virtually error-proof with an error rate of less than one percent. IRS e-file greatly reduces the chance that you will get an error letter from the IRS.

Yet, there's strong evidence of computing errors in the tax software used by these providers. And, the IRS doesn't conduct any tests on this software. So, is it really easier to file online if your tax return comes out incorrect, and you have to file an amended return (which has to be done on paper) or worse...?

2. It's Faster to E-File

When you e-file a tax return it takes 10 to 21 days to receive your refund. If you mail a paper return, it takes 4 to 8 weeks. Big difference! Also, as I mentioned before, it takes less time to type in answers to easy questions in plain English than it is to decipher IRS-speak and hand-write numbers. Yes, I concede, it is faster to e-file...if all goes well. If your tax return is inaccurate due to computing errors or doesn't get really get sent to the IRS though...Well, it is conceivable that your tax problems could last for years.

3. It's Safer to E-File

Really? I mean. Really? C'mon...really? I'm sure that mailing in a paper return carries its risks as well. However, it is SO much easier for identity thieves to snag your sensitive information and refunds on the computer. Crooks aren't really known for their love of taking the more difficult route. Prison inmates aren't exactly let out for the day to rifle through mail boxes during tax season, but they sure do seem to have access to e-file software.

You know why the IRS really wants you to e-file your tax returns? It's faster, easier, and cheaper for them. They are under-staffed and under-funded, and they think this is an easier way to run things. But, they may soon find that they're stretched even thinner with all of these tax fraud cases.

I used to e-file myself, until the program I was using (I won't name names, but it's the most popular e-file software out there) told me that I needed to pay an additional fee to file my Florida state income taxes. I told it that I didn't want to file my Florida income state taxes, but it wouldn't take no for an answer. For those of you who don't know, there is no such thing as Florida income state taxes. Sales and property taxes, sure...but not income.

If your taxes are too difficult to file on paper, it is my recommendation that you find a highly reputable CPA with years of experience filing your type of tax return. If the e-file option has already landed you in a hot mess with the IRS, give me a call at 888-415-1337 or fill out the submission form for a free consultation.

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