THE SUCCESS OF ELECTRONIC FILING OF INCOME TAXES: DISCRIMINANT ANALYSIS OF TAXPAYER MOTIVATION

The Internal Revenue Service has made expansion of electronic income tax filing by individual taxpayers the "lynch pin" of its vision for the future. The goal of the IRS is to have 60 million returns filed by electronic means by 2001. Only 14.8 million taxpayers used electronic filing options in 1996, and the IRS has yet to publish a formalized plan or strategy to expand electronic filing. If nothing is done, each of the existing electronic filing options has limitations that preclude growth at the rates required to meet IRS goals.; The IRS has not done the necessary research to identify those incentives which might motivate taxpayers who currently file paper returns to make the transition to electronic filing. Neither has the IRS made any attempt to determine the impact of the adverse taxpayer perception of the IRS on the expansion of these programs. If the IRS is to meet its goals, it is important to understand the characteristics of electronic filing so as to target those areas that might induce taxpayers to make the move to electronic return filing. This study identifies those characteristics required to motivate taxpayers to make this transition, resulting in a framework which facilitates prediction of success based on taxpayer preference and demographics.; A sample survey of the taxpayer population was used to develop a basic data set on taxpayer motivation. Three government studies were used to assist in developing and understanding the data on electronic filers. Survey data were used in a series of discriminant analyses which resulted in a set of predictor variables. These predictor variables can be used to predict taxpayer membership in either electronic or paper filer groups and to provide a basic set of taxpayer motivational tools which should be useful to the practitioner of the art and science of public administration.