The IRS has demonstrated a surprising ability to adapt to changing technologies and taxpayer preferences.
In addition to providing reams of documents and supporting information through its website, the IRS has created a highly successful electronic filing option for both individual and small business taxpayers.
It turns out that the IRS prefers electronic tax filing. Although you can still choose to mail in your returns and payments the old-fashioned way, electronic filing reduces paperwork and allows the IRS to take advantage of expedited processing systems. Essentially, it's more cost-effective for the IRS to process electronic returns than it is for them to process returns delivered by traditional methods.
But electronic tax filing also has benefits for small businesses. If you haven't filed returns electronically yet, it's time to explore how your company can use the IRS' electronic tax filing system to your advantage.
The IRS electronic of e-file system has become the most widely used method for individual and business income tax reporting. In addition to filing your annual return, e-file can be used to file a broad range of IRS forms for employment taxes, partnerships, corporations, excise taxes, nonprofit returns, extension requests and more. Taxpayers can usually file federal and state tax reports at the same time and payment by electronic funds withdrawal streamlines the process even further. But to access e-file options, you will need to go through a third-party such as a payroll provider or an IRS-authorized e-file provider.
Benefits for Small Businesses
Electronic tax reporting and payment have several advantages for small businesses:
- Fast turnaround. The IRS verifies receipt of an e-filed return or form within 48 hours. Since processing time is significantly reduced, e-file taxpayers receive refunds in less than half the time that is required for a mail-in return.
- Convenience. E-filers can separate return filing and tax payment requirements as a matter of convenience. In other words, you can file your return early, but delay payment until the actual due date, giving you access to your money for a longer period of time.
- Security. Individual and business e-filers enjoy the security of knowing that the IRS has received their forms and payments. The submission of e-filed forms results in an email notification that can be archived to demonstrate compliance in the event that the return is mishandled during processing.