IRS May Lift Electronic Filing Requirement

The Internal Revenue Service wants to free small businesses from a requirement that they file computerized tax returns, IRS Commissioner Charles O. Rossotti said. The proposal drew plaudits from critics who for three years have argued the electronic-filing rule ties up managers’ time and drives up costs. Small businesses that pay more than $50,000 in payroll taxes must use the Electronic Federal Tax Payment System; the IRS proposes to raise the threshold to $200,000 on Jan. 1. “ The decision to raise the threshold requiring the use of EFTPS shows understanding and flexibility for the needs of smaller businesses,” said Bennie L. Thayer, chief executive of the National Assn. for the Self-Employed. The IRS said it would waive penalties for businesses that must file electronically from July 1 through Dec. 31. A public hearing on the proposed regulations is set for May 11.