Summary: The prospect of a prompt refund makes electronic filing very appealing for most taxpayers. These expedited refunds come at a price, however. Taxpayers have to pay a third party to prepare or electronically transmit the returns and must pay yet another fee if they want to obtain the expedited refund through a financial institution. The Internal Revenue Service's (IRS) research suggests that this cost deters most people from filing electronically unless they need their refunds right away. In promoting electronic filing, IRS has focused on attracting more preparers and transmitters. Although this approach has boosted the number of taxpayers filing electronically, about 90 percent of all individual income tax returns in 1992 were still filed in traditional ways. GAO believes that IRS needs to make electronic filing more appealing and more available to a broader segment of the population. IRS also needs to address various operational issues that if effectively resolved could make electronic filing more appealing and help IRS more fully realize the benefits available through this technology.
