A new report from the U.S. Government Accountability Office contains a few tidbits that suggest another technique for tax resisters who file returns:
IRS estimates that a paper return costs $2.36 more to process than an electronically filed return.
Paper returns also limit the effectiveness of IRS’s enforcement programs. To control costs, IRS does not transcribe all the lines on paper tax returns into its computer databases, such as taxpayers’ telephone numbers, limiting the amount of information available electronically for enforcement purposes. As we previously reported, even small changes in the amount of information IRS transcribes can consume substantial resources that might offset some potential savings from electronic filing. Further, to avoid disadvantaging taxpayers who file electronically, IRS has a policy of posting the same information from electronic and paper returns to its databases. Consequently, if a line is not transcribed from paper returns, it is not posted from electronic returns either. Only information posted to computer databases is readily available for use in IRS’s automated compliance checking programs. These programs include matching tax return entries with information returns from third parties, such as Form W-2s from employers or Form 1099s from financial institutions, and selecting suspicious returns for audit.
According to IRS officials, transcribing and posting more comprehensive information from individual income tax returns could facilitate the audit process, expedite contacts for faster resolution, reduce handling costs, allow for improved case selection, and potentially better define specific tax gap issues. Although we have not independently verified IRS’s methodology, for one of its main enforcement programs — the Automated Underreporter Program — IRS officials estimate that having all tax return information available electronically would result in a $175 million increase in tax revenue annually, while at the same time, reduce its “no-change” rate, making it less likely that IRS would select taxpayers for further contact where no additional tax was assessed, thus lowering taxpayer burden.
So if you want to cause a little more expense and trouble for the IRS and you want to help make their tax enforcement less efficient, file paper tax returns rather than filing electronically. This doesn’t mean you can’t do your tax return on a computer or with the help of a tax professional, but when you get to the end of that process and you’re ready to file, instead of “e-filing” ask for a printout and mail the printout in instead.
If you have your taxes done by a tax professional or at a volunteer tax assistance site, you might need to say explicitly that you want to file a paper return yourself rather than “e-filing” or the person helping you with your return may assume otherwise.