E-file is a system for submitting tax documents to the Internal Revenue Service through the internet or direct connection, usually without the need to submit any paper documents. Tax preparation software with e-filing capabilities are available as stand alone programs or through websites or tax professionals from major software vendors for commercial use.
Of the 139.3 million U.S. returns filed in 2007, 79.98 million or about 57.4 percent were filed electronically. [1] In 2010 a total of 129.3 million U.S. returns were filed, and 93.4 million were filed electronically. In other words the percentage of returns filed electronically increased to 72.3 percent of total returns.[2]
Taxpayers can e-file for free using the IRS Free File service, either using a vendor's tax software product, if eligible, or by using online fillable forms.
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The IRS started electronic filing in 1986 to lower operating costs and paper usage. E-filing originally used the processing system developed in 1969 by the IRS, but since 2003, the IRS has been developing a new enhanced processing system called CADE.