New Yorkers could have saved more than $68 million if they were able to file their taxes online for free last year -- according to an analysis released today by Sen. Chuck Schumer and the Joint Economic Committee in Washington. Nationwide, taxpayers could have saved more than $1 billion.
So with tax returns due to the Internal Revenue Service, Schumer plans to introduce a new bill Tuesday that would make it free for all taxpayers to file online and directly to the IRS. This bill will work in conjunction with a proposal by Sen. Daniel Akaka (D-Hawaii) to require the IRS to set-up its own online tax-filing system.
"The e-file fee is like a tax on paying taxes," said Schumer, the New York Democrat who chairs the Joint Economic Committee.
Right now, only people with annual incomes below $54,000 can file their tax returns electronically for free, based on an agreement . . .
Kristen Daum
. . .between the IRS and tax-preparation companies. Those with incomes greater than $54,000 end up paying various costs -- whether to tax-preparation companies, like H&R Block, or software programs, like TurboTax -- to file their returns electronically. But even then, taxpayers must print off their electronic returns and mail them in paper form, which slows down the time it takes to get refunds and increases potential error in processing the paperwork.
About 56 percent of all taxpayers filed electronically in 2007 --- racking up more than $1 billion in extra fees. New Yorkers followed the national trend last year, with more than 54 percent filing online and spending more $68.3 million in e-filing expenses. That's the second highest cost for e-filing of any state in the U.S, the committee found.
But taxpayers aren't the only ones who save money from the proposals. The IRS would also save millions if it converted to an electronic filing system and made it free and accessible to taxpayers, Schumer said.
According to the committee, the IRS would have saved more than $141 million last year if everyone filed their taxes online. E-filing would also streamline the IRS' ability to process returns. It costs the IRS $2.50 to process each paper return, compared to just 30 cents for every e-filed return, the committee reports.
"No one should have to pay a fee for the 'privilege' of electronically filing their taxes -- especially when it saves the government money," Schumer said.