IRS Tax Form 8948 discussed by a Wilmington NC CPA Firm | you can choose not to E-File

This year the IRS expanded its mandate for tax preparers to E-File. Which is actually easier for the preparer. But some taxpayers don’t like to E-File. And there is way to opt out by filing tax Form 8948 with your paper return, at least this year.

“E-File probably allows the IRS to tax audit your return more quickly and comprehensively. ”
-Gary Bode, Wilmington NC CPA and tax accountant

Other reasons to not E-File? Some folks don’t like computers. Some don’t trust the Internet to protect their confidential information. Some don’t like saving the IRS manual processing costs. Some miss the physicality of paper. Sometimes there is a tax issue that cannot be resolved well enough to use E-File.

The IRS doesn’t make their internal tax auditing policies public. But obviously Information Technology is a vital component of how they operate. And rightfully so. They are actually very efficient. A good database can be setup to query outlying figures automatically. And E-File enters all your data for them. Manual processing probably only uses key figures off your return. Certainly the IRS checks:

• Intra return feasibility IE if your cash charitable contributions exceed a certain percentage of your income, the return could be red flagged.
• Comparison to your previous returns IE your current cash contributions are 50% of your income but were 7% on the previous two returns.
• Comparison to similar taxpayers IE if you’re a GE employee, comparing your cash contributions to other GE employees (by absolute dollar amount or percentage of income).

But you can opt out of E File by filing IRS tax form 8948 with your paper return. The main text from it appears below.

If you’d like a free initial consult from a CPA firm in Wilmington NC, please call us at 399-2705. We’re a proactive firm offering a friendly mix of expertise and personal service. We offer more than just tax preparation of course.

8948

(December 2010)

Department of the Treasury

Internal Revenue Service

Preparer Explanation for Not Filing Electronically

▶ Attach to taxpayer’s Form 1040, 1040A, 1040EZ, or Form 1041.

OMB No. 1545-2200

Attachment

Sequence No. 173

Name(s) on tax return Taxpayer’s identifying number

Check the applicable box to indicate the reason this return is not being filed electronically.

1 Taxpayer chose to file this return on paper.

2 The preparer received a waiver from the requirement to electronically file the tax return.

Waiver Reference Number Approval Letter Date

3 The preparer is a member of a recognized religious group that is conscientiously opposed to filing electronically.

4 This return was rejected by IRS e-file and the reject condition could not be resolved.

Reject code: Number of attempts to resolve reject:

5 The preparer’s e-file software package does not support Form or Schedule

attached to this return.

6 Check the box that applies and provide additional information if requested.

a The preparer is ineligible to file electronically because IRS e-file does not accept foreign preparers without social security

numbers who live and work abroad.

b The preparer is ineligible to participate in IRS e-file due to an IRS sanction.

c Other: Describe below the circumstances that prevented the preparer from filing this return electronically.