E-file vs Mailing Taxes – Audit Risk Analysis

E-file vs Paper filing for federal taxes

Being a programmer and attorney, e-filing is not an attractive prospect to me:

Every year I strive to be as complete and accurate as possible when filing my taxes. However, as a programmer, it is apparent that e-filing makes it immensely easy for the IRS to instantly run validation, algorithms, and analysis on your return with zero human intervention. Once your data is electronically transmitted to the IRS all of your data can be analyzed in milliseconds (whenever they choose).

Additionally, your return (along with millions of others) has to be communicated via the internet and then stored somewhere on IRS servers. Since US Government sites and services are not immune to hacking, your e-filed tax return could be at risk potentially much earlier in the year than someone that paper files.

Paper filing means the IRS has to do at least a modicum of work to enter/scan your tax return. That takes some time and means your return may be further down the list of potential audits for the year.

Of course, choosing to file via paper does NOT mean someone should be dishonest. My responsibility as a taxpayer and citizen is to be honest and accurate, which I wholeheartedly endorse. I respect our government and their bureaus (the IRS is a bureau of the Department of the Treasury). I simply prefer to submit my information via paper and the IRS can then do their job processing my return.

Lastly, I generally try to file as close to the deadline date as possible. Since the IRS has a limited amount of manpower they can only randomly audit a finite number of returns a year. More returns before you return means more workload that potentially pushes your return to the back of the list. I have nothing to hide, I simply would prefer not to be randomly audited! 🙂

The other side of the coin

I would be remiss is if I did not mention a least one benefit of e-filing… the foremost of which may be receiving a quick refund (if you are due one), not to mention avoiding the post office and potential lines 😉

However, I personally still prefer doing it the old fashioned way. My views are not gospel and I an am always open to other ideas 🙂 If you have any thoughts or opinions on the topic, feel free to comment at the end of this post.

Additional Reading

Some additional information on the pros/cons of e-filing and the potential audit risk of each method:

Does e-filing increase your chance of an audit? › Tax Pros / Tax Prep Fees / Tax Returns › Taxes › June Walker

Does e-filing increase your chance of an audit? › Tax Pros / Tax Prep Fees / Tax Returns › Taxes › June Walkerhttp://junewalkeronline.com/taxes/tax-pros-tax-prep-fees-tax-returns/does-e-filing-increase-your-chance-of-an-audit/Other tax pros believe just the opposite: That it’s better to file a paper return because the percentages are in your favor. “E-filing would increase your exposure to an audit because…

Ten Ways To Audit Proof Your Tax Return - Forbes

Ten Ways To Audit Proof Your Tax Return – Forbeshttp://www.forbes.com/2009/11/03/audit-proof-tax-return-irs-personal-finance-wood.htmlExcept for tax protestors, no one wants to fight with the Internal Revenue Service. That’s why there’s such a mystique about avoiding an audit. While what-triggers-an-audit theories abound, there…

Pros and Cons of E-Filing Taxes | US Tax Center

Pros and Cons of E-Filing Taxes | US Tax Centerhttp://www.irs.com/articles/pros-and-cons-e-filing-taxesRisk for Audit: Some tax preparers have postulated that e-filing a return is a quicker way to a tax audit, since paper returns are more likely to sit on the shelf longer. While the IRS may prefer…
Is audit risk greater with electronic filing vs. paper – Tax Research Live Communityhttps://taxresearch.lcp.intuit.com/post/show_full/csZET8LKSr4kXvaaWP5K-7/is-audit-risk-greater-with-electronic-filing-vs-paperUh….the stats came out about a month ago (released from IRS), efiled returns ARE subject to higher audit risk. I think the article was in CCH weekly but I’m not gonna try to find it.

Summary: My primary tax advice is to always be as thorough and forthright as possible when preparing your return. Beyond that, I personally prefer paper filing.


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