University of Arkansas, Fayetteville
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Abstract

As a part of the IRS Restructuring and Reform Act of 1998, Congress set a goal for the IRS to have at least 80 percent of federal tax returns filed electronically by 2007. During the last tax filing season, electronic filing of tax returns increased by around 9 percent, up to 41 percent of individual returns filed, with over 18 million taxpayers filing state and federal returns simultaneously. While the number of electronic returns is increasing, the IRS is unlikely to reach its 80 percent mandate by 2007. Government taxing agencies are actively pursuing ways to use technology to increase effectiveness and efficiency while decreasing costs. In order to reach more citizens, research is needed to identify who currently e-files and what are the barriers for those that do not. In response, a survey was mailed to Arkansas citizens concerning their use of electronic filing for federal and state tax returns. The goal was to identify demographic characteristics of taxpayers that file electronically versus those that do not. Responses were statistically analyzed for variations. The results provided a basis for research into possible actions the government can take to increase the number of e-filers. The findings will be of interest to the IRS and state tax authorities, tax researchers and the general public. This is due to the fact that government agencies can create cost savings by automating more of their services and transactions, and these benefits accrue to the public through lower taxes or increased public goods.

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