IRS E-filing Program History & Timeline

When taxpayers electronically transmit their income tax return it saves the IRS and state taxing agencies time and money. It is also a "green" (environmentally friendly) alternative to printing and mailing.

It costs considerably more to process paper returns into a format that is machine-readable. In fact, due in part to increased e-filing, the IRS budget actually decreased (inflation-adjusted figures) between 2010-2015. From extremely few taxpayers using the system in 1986 to becoming today's norm, the history of e-filing demonstrates that the trend towards electronic transmission continues to grow.

• 1986 - Five tax preparers in three cities—Cincinnati, Raleigh-Durham, and Phoenix—participated in a pilot program. Those preparers filed 25,000 returns. The IRS assigned one employee to switch the phone line to a modem every time there was an e-filing.
• 1987 - The program expanded to 66 tax preparers in seven cities, filing 78,000 tax returns. The program also added an electronic-fund deposit that year.
• 1988 - Taxpayers e-filed close to five times the number of the previous year, or 583,000 returns. During that time, the IRS moved to an IBM Series I processing system, a 16-bit minicomputer, eliminating the need for an employee to plug the phone into a modem.
• 1989 - The e-filing program expanded to 36 states, resulting in over 1 million e-filed returns.
• 1990 - IRS e-filing went national, netting 4.2 million e-filed returns.
• 1998 - Due to the explosive growth of e-filing, Congress mandated that the IRS reach an 80 percent e-file rate for "all federal tax and information returns."
• 1999 - The IRS started to accept electronic payments via credit cards or direct debit. The IRS also launched a pilot program that allowed taxpayers to electronically sign returns instead of mailing a signature form.
• 2002 - The IRS created the taxpayer Personal Identification Number filing, or PIN, that allowed all taxpayers to electronically sign their return. The result was an entirely paperless tax-filing process.
• 2003 - The IRS launched Free File, which allows taxpayers comfortable with their tax returns to use electronic forms free of charge.
• 2005 - The e-filing system crossed the 50 percent threshold, with 68.4 million returns filed. 2005 also marked the end of Telefile, or tax filing by phone.
• 2009 - In an attempt to increase e-filing rates, Congress approved legislation requiring tax professionals who prepare 10 or more individual returns to file electronically.
• 2011 - E-filing crossed the 100 million return mark, which equaled 3 out of every 4 returns being e-filed.

E-filing has grown by leaps and bounds since its inception in 1986. It has also saved money and streamlined the process for filing tax returns. Filing with E-file.com can save you money and help get you a tax refund faster than with mail.

Q&A: What is electronic tax filing?

Electronic tax filing defines the process of packaging, encrypting and transmitting a tax return digitally to the Internal Revenue Service. One of the benefits of filing electronically is that returns are received and generally processed much faster than paper filing. This allows for faster processing of tax refunds, especially when the taxpayer elects to receive their refund through direct deposit rather than a paper check in the mail.

The majority of Americans now elect to file electronically because software such as E-file.com makes the process faster and easier than prior methods.