The Department of Revenue has issued a draft Technical Information Release that would require income tax preparers who reasonably expect to file more than 10 returns in a calendar year to file those returns electronically.
The existing rule established in 2004 required tax preparers filing 100 or more returns annually to file electronically. Before that, the threshold was 200 returns.
The new, lower threshold of more than 10 is proposed to take effect January 1, 2012, and would parallel an Internal Revenue Service electronic filing threshold taking place on that date.
While it is hard to say precisely how many additional tax returns would be filed electronically under this new rule, it is safe to say that it would insure continued growth in electronic filing, which increased by 10 percent in tax year 2010 over tax year 2009.
Just among tax practitioner, the number of returns filed electronically increased by 153,983, going from 1.668 million in 2009 to 1.822 million in 2010.
Overall, of 3.424 million tax returns filed in 2010, just 225,672 were paper returns imaged and keyed, a decrease of 56,658 from the previous year. Another 542,487 paper returns came in with 2D barcodes (down 129,063 from the previous year); these are paper returns that are read electronically due to the barcode.
The new rule is likely to reduce the number of 2D barcode returns, virtually all of which are filed by tax practioners, in half. (Editor's note: DOR now believes that while the new rule will reduce the number of 2D barcoded tax returns, the reduction will be something considerably less than half; perhaps in the neighborhood of 50,000 returns.)