IRS is addicted to e-filing

Electronic filing of tax returns has grown smartly in the last few years, and a good thing, too. IRS no longer has the capacity to process returns the old fashioned way, reports Tax Notes Today ($):

Speaking at an IRS software developers conference, George Jakabcin, IRS assistant deputy associate chief information officer for systems integration, said the IRS could not afford to lose the trust of taxpayers who are filing their tax returns online.

If some event led half of the current e-filers to switch back to paper, "we would be in a world of hurt," Jakabcin said. "We no longer have the capability to process the additional 43 million returns manually. We no longer have the facilities, we don't have the IT infrastructure in place to support them, we don't have the people, and some would begin to argue that we are beginning to lose the expertise."

Trouble is, e-filing has stimulated a boom in "phishing," identity thieves posing as the IRS. About a month ago my wife received an email that appeared to be from the IRS, telling her she had until May 8 to file electronically to receive her tax rebate check--I had her delete the message immediately. In 2006, IRS detected 247 phishing sites, while this year, just by May 23, they already had spotted 1,327 such sites.