COVID-19 has had devastating effects on the healthcare industry, supply chain, travel, and the global economy. Now, its impact on the Internal Revenue Service is coming to light as well.
According to a report released by the Treasury Inspector General for Tax Administration, or TIGTA, the IRS decided to destroy an estimated 30 million paper-filed information return documents in March of 2021 due to a significant backlog of paper tax returns.
Efforts made by the IRS to encourage businesses to modernize to e-filing in recent years have seen much slower adoption than amongst individuals.
In addition to the significant backlogs, processing paper returns is expensive. According to the TIGTA report, the IRS spent more than $226 million on processing paper-filed tax returns in the 2020 fiscal year.
Tax attorney Mary King of the Law Office of Mary E King PL says:
“Much of the hesitation that businesses have about making the switch to e-filing is that it is difficult to identify what business tax forms are even available to e-file. The IRS will likely continue to see slow adoption amongst businesses until the process is made clearer.”
The guidance of an experienced tax attorney can help your business navigate the complex waters of filing taxes for your business and transitioning from paper filing to e-filing to ensure your tax returns are processed in a correct and timely manner.