A former Associate Tax Legislative Counsel at the Treasury Department said the Form 1040 individual income tax return is the “800-pound gorilla” in the room in terms of IRS priorities for modernizing returns, leaving Form 941-X, used for adjusting and correcting payroll taxes, jockeying for attention.
Form 1040 is used by U.S. taxpayers to file an annual income tax return. According to the IRS’s 2022 Data Book, 160,571,367 individual tax returns in the Form 1040 series were filed this tax season. Of those returns filed, 150,605,162 were submitted to the IRS electronically. As such, nearly 95% of the forms in the 1040 series were e-filed.
On the employment tax side, the IRS received 31,180,674 returns from employers, including Forms 940, 941, 943, 944, 1042, and 941-X. However, when it comes to the electronic filing of these returns, only 18,962,588 were sent to the IRS electronically, meaning that just a little more than 60% of employment tax returns were e-filed for the 2022 filing year.
“This is not the fault of the IRS,” Rochelle Hodes, Principal at Crowe LLP’s Washington National Tax Office, began. “This is a challenge of our tax system.”
Hodes recalled her experience with the government, both as an employee and in private practice, when the IRS first began using e-filing with magnetic media tapes for information reporting and transitioning to file submissions through the FIRE (Filing Information Returns Electronically) system. But, in her experience and observations...
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