Wednesday, January 25, 2012

How does E-Filing Work?

Question: Ralph, I was wondering if E-filing is safe. I am always concerned about identity theft and I want to make sure my information is secure.

Answer: We are now mandated to file all tax returns electronically, quite frankly we have been doing this routinely since we the Internal Revenue Service initiated E-filing. In my view, it really is the most efficient and safest means of filing your tax returns. When we create your tax returns, rather than providing a copy for your to mail, we develop an electronic file which we submit through our tax preparation software provider. That file includes all the traditional tax return information in an electronic format. Several times per day, the host providers dumps that data to the IRS and the IRS will process the return and provide a receipt signifying their receipt of the tax return. I view this as being the best means of filing because it not only provides proof that the tax returns was filed timely, but it also undergoes many basic checks for accuracy. The return is reviewed for completeness, names, social security numbers, dates of birth, and other information is reviewed. These checks substantially reduce the risk of errors in data entry as compared to paper filing. The process is also more secure in my view since you are not using the mail system.

The IRS has recently mandated that any accountant preparing tax returns generally must e-file their client's returns unless they can demonstrate a reason for not e-filing. We are now also required to file a special form with any "paper" returns we file stating the reason for not e-filing. All in all, it's really a great system and our clients are really pleased with the response time. In most cases, refunds are directly deposited to client's accounts with 7-10 days of filing.

When you are ready to e-file your tax returns, contact Ralph V. Estep, Jr., of Saggio Accounting+PLUS either by telephone at 302-659-6560 or visit our website at We are offering a $35 discount for all new clients, so don't delay.

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