FROM THE OFFICE OF PUBLIC AFFAIRS

Today the Treasury Department and the Internal Revenue Service announced new efforts to reduce taxpayer burden through expanded electronic filing opportunities.

E-filing is an immediate and important way to reduce the burden for both taxpayers and the government. Taxpayers who file returns electronically, and opt for Direct Deposit, get their refunds in half the time. Electronic returns are far less error-prone, which cuts down on unnecessary notices and penalties. Electronic returns are also far cheaper to process, which saves money for Uncle Sam.

"I believe that the current tax code is an abomination that cries out for vast simplification and reform. Until that vision can be accomplished, we need to reduce the burden on taxpayers in the short term by rapidly expanding opportunities such as e-filing, and making it free to those who choose it. No one should be forced to pay extra just to file his or her tax return. To accomplish this goal, this Administration is committed to taking a new approach. I've asked Commissioner Rossotti to reach out and work in a new partnership with the private sector. I don't intend for the IRS to get into the software business, but rather to open a constructive dialogue with those who already have established expertise in this field. In the end, this effort should come up with a better way to save time and money for both taxpayers and the government," stated Treasury Secretary Paul O'Neill.

The President's budget will contain two proposals aimed at increasing the number of taxpayers who choose to e-file. First, legislation is to be proposed extending the April filing date for electronic returns by at least ten days. This will give taxpayers a little extra time to get their affairs in order around tax day as an added inducement to e-file. Second the Administration proposes to encourage further growth in electronic filing by providing taxpayers the option to file their tax return on-line without charge. Treasury believes the best way to accomplish this is by forging a new partnership with existing private sector expertise in the field.

Currently, e-filing is the product of a public-private arrangement where taxpayers use e-filing vendors which must be approved by the IRS. Today, over 40 million taxpayers take advantage of this process. However, that leaves the more than 90 million taxpayers who don't. Research shows there are many factors that influence this decision.

One is cost: while it only costs 34 cents to mail a paper return, e-filing is sometimes offered for free, but can sometimes cost up to $10-$12. Another is privacy: some taxpayers don't want to send their personal tax information to the IRS via a third party.

"This Administration has worked hard to lower the tax burden on working Americans. There's more to be done. We should do everything we can to reduce the burdens the tax system places on taxpayers. By encouraging more people to file their returns electronically, the proposals in the President's budget will produce real benefits for taxpayers." stated Treasury Secretary Paul O'Neill.