The Internal Revenue Service should consider penalizing tax preparers who fail to file tax returns electronically if it wants to meet its goal of an 80 percent e-file rate by 2012, the Government Accountability Office says.

The IRS is close to the goal already for individual tax returns, with 79 percent filed electronically this year, including returns self-filed by taxpayers. But the IRS is far from meeting its goal on other types of returns.

This year tax preparers who filed more than 100 individual, estate or trust returns annually had to file them electronically. Next year that number drops to 10, raising the possibility that compliance will fall, GAO says.

"IRS's plans to identify preparers who are not complying with the mandate are not fully developed because IRS does not know the extent of noncompliance and it may be low," GAO says in the report. "Nonetheless, officials stated some noncompliance likely exists and may increase in 2012 when the mandate applies to more preparers. Regardless of the extent, IRS does not have authority under the IRC to assess penalties on preparers who fail to comply."

The Treasury Department does have some allowances for penalties, GAO says, but they may be too harsh.

GAO recommends that Congress give IRS the authority to assess penalties for non-compliance by preparers. It also recommends that IRS study lessons learned from e-file efforts to date; study the feasibility of bar coding and transcribing individual lines of tax-return data; develop a path to include more forms in the e-file program; and set a timetable for adding high-volume forms including the 1040-X and 1040-NR.

Source: GAO analysis of IRS Document 6292, Fiscal Year Return Projections for the United States 2011 through 2018 (revised June 2011)
^aIRS's 2012 e-file goal also includes real estate mortgage investment conduits and excise tax returns. These returns are small in volume and not included in this chart.
^bPercentages are based on non-rounded return counts.
^cWhile the number of returns needed to the reach the 80 percent goal may appear small in several cases (e.g., corporate returns), the percent needed is large. Numbers are based on non-rounded return counts.
^dNumbers may not sum to totals due to rounding.

For more:
- read the summary
- download the full report (.pdf) 

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