March 2000


In January, the IRS mailed postcards to approximately 11 million taxpayers, inviting them to file paperless tax returns. The postcards contain e-file customer numbers (ECNs) that recipients can use as "signatures" on electronically filed returns, eliminating the need to mail paper signature documents. When the program began in 1999, the IRS received 660,000 returns using ECNs--more than one-fourth of the almost 2.5 million returns e-filed by individual taxpayers. The IRS expects the number of e-file returns to increase to 4 million in 2000.

The ECN is one of two pilot programs the IRS is conducting to counter a potential barrier to e-filing: the need to mail a paper form after transmitting the electronic data. A similar program allows taxpayers that e-file through participating tax preparers to create their own personal identification numbers (PINs) as electronic signatures.

The IRS projects that the number of 1999 individual tax returns (Forms 1040, 1040A, and 1040EZ) filed electronically will increase by more than 20% over 1998 and by more than 8% each year through 2005. This year alone, the IRS plans to double its number of e-file preparers from last year's 8,100. The IRS selects preparers based on credentials for electronic return originators.

IRS Website Analyzes Tax Scenarios

The IRS website now has interactive prompts to help taxpayers determine whether they qualify for relief from a joint tax liability with their current or former spouse. Answering a short series of yes/no questions tells a user whether innocent spouse or injured spouse relief provisions can be used.

The "Spousal Tax Relief Eligibility Explorer," available as a link from the "Tax Info for You" page of the IRS website (, takes the user through the qualifying-factor questions. If the person appears to qualify for relief, the program offers to download the appropriate application form.

The 1998 law made it easier for an individual to qualify as an "innocent spouse" and be relieved of the liability arising from filing a joint tax return. The law offers relief, under certain conditions, to

1) an individual who did not know about erroneous items that caused additional tax,
2) a divorced or separated individual to the extent an additional tax is allocable to the other spouse, or
3) an individual who does not meet these circumstances but whom it would be inequitable to hold responsible for the taxes owed.

"Injured spouse" relief applies when a couple files jointly and has their tax refund reduced or eliminated because of an unpaid tax or other debt that only one of them owes.

Taxpayers can use IRS Form 8857, Request for Innocent Spouse Relief, or Form 8379, Injured Spouse Claim and Allocation, as appropriate. *

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