It’s hard to believe that in just twenty five years, the Internal Revenue Service’s online income tax filing, efile, has grown from processing 25,000 individual income tax returns annually to over 100 million.

The IRS efile has surpassed a landmark of 1 billion individual Form 1040 tax returns received and processed safely and securely. The electronic tax filing is arguably the most successful modernization program ever undertaken by the federal government.

In the 1980s, processing tax returns became increasing ineffective because of the complex, time-consuming and error-prone process of converting hard copy tax returns into a form that could be processed by machine. In addition, the IRS was facing a growing problem of increased cost and space to house the reams of paper forms and tax documents. And so the age of electronic tax filing was born.

The initial IRS efiling process was initiated by a tax preparer using a machine called a Mitron, which was a tape reader with a modem. The tax preparer would insert the tape into the Mitron to transfer the tax data. At the IRS, an employee would transfer the tape into a super mini-computer called Zilog.  Zilog would read the data and convert it to a format that the IRS’s Unisys system could process.

In 1986, the IRS launched it’s electronic tax filing pilot program. Five tax preparers in 3 cities participated, efiling 25,000 tax returns. Although the program could only accept simple returns that were due a refund, it was deemed a success and the pilot was expanded.

In 1987, 66 tax preparers used the online income tax filing system, filing 78,000 tax returns. That year, functionality was added to allow electronic Direct Deposit to put tax refunds directly in the bank accounts.

The following year, a technological update by the IRS to an IBM Series I processing system, eliminated the need for an IRS resource to plug the phone into a modem. Tax preparer interest in electronic tax filing exploded. 583,000 tax returns from 16 IRS districts were filed in 1988.

The efile program was expanded nationwide in 1990. 4.2 million returns were filed electronically.

In 1998, Congress passes a provision setting a goal of an 80% efile rate for all federal tax returns. The following year, efile functionality is added that allows electronic payments through credit cards and direct debit.

Efile becomes entirely paperless in 2002, when the IRS allows taxpayers to sign their tax returns electronically using a Personal Identification Number (PIN).

By 2007, more than 50% of all individual income tax returns were filed electronically (79.9 million).  And in 2010, that percentage jumped to 72% (93.4 million).

In 2011, Efiled returns cross the 100 million threshold in one filing season; cumulative total exceeded 1 billion returns. Approximately three out of every four individual tax returns were filed electronically.

source: irs.gov

The month of April brings warm weather, major league baseball and the deadline for filing your 2010 income tax return? If you haven’t prepared your income tax, you still have options for filing before the April 15 tax deadline. Here are some of the options for filing your tax return.

The quickest and most efficient way to get your tax return in on time is to sign up for one of the many online tax services. They provide the software so you can file your income tax online. Most online tax services offer the service for free or at a steep discount. Taxpayers can also find tax coupons online by using searching the web using the keyword phrase “tax coupons”.

Another option is to contact the IRS. The IRS provides a free income tax preparation program for individuals earning less than $49,000 who cannot prepare their own federal income tax returns. The IRS Volunteer Income Tax Assistance (VITA) will help taxpayers prepare their income tax and help answer tax questions about special credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Disabled. The program offers free electronic tax filing (e-filing) at most of it’s sites. For more information on TCE, call 1-800-829-1040 or log onto www.irs.gov

Individuals who have tax problems or complicated tax situations should contact an income tax lawyer or tax consultant immediately. Tax lawyers can answer your income tax questions and act as your tax representative to the IRS. If you have serious tax problems, the price for a consultation with a tax attorney is worth it.

If you will not meet the tax deadline, you can file for a tax extension. Taxpayers have 3 choices for filing the income tax extension form (Form 4868, Application For Automatic Extension of Time To File U.S. Individual Tax Return); electronically, by paying part of your tax due with a credit card through an outside service provider listed on the form, or by mail.

If you file your Form 4868 electronically you will receive an acknowledgment or confirmation number and you do not need to mail in Form 4868. If you need to pay additional taxes, you may do so through the outside service provider or through e-file. Be advised that each tax service provider will charge a convenience fee based on the amount of the tax payment.

These are the most common options available for filing your tax return. For more information about income tax or filing an income tax extension visit the IRS website.

source: irs.gov