What Was Telefile?
Telefile was a service created by the federal government and some state governments that allowed taxpayers to file their taxes over the phone.
The federal government's Telefile system was provided by the IRS from 1997 to 2005. Telefile allowed taxpayers filing IRS form 1040EZ to phone in their tax returns with a touch-tone phone. The IRS ended the Telefile program as a result of the general migration to electronically filed tax returns.
Many of the state Telefile systems have been discontinued. A number of states have Telefile services for limited purposes. Texas, for example, has a TeleFile number for sales tax filing requirements, but it can be used only by businesses with zero sales to report.
- Telefile was a program the federal government and some state governments began offering in the late 1990s so that taxpayers could file their taxes over the phone.
- Filing taxes over the phone was easier—and considered a technological advance—over the system that required filers to mail in their taxes.
- The rise of the Internet made it possible to file taxes online and filing by phone quickly became obsolete.
How the Federal Telefile Worked
Telefile is no longer in place and individuals can no longer file their federal tax forms over the phone.
The IRS maintains a phone help system to this day but the operators are there to answer questions, not to accept your tax return.
The IRS made Telefile available to individuals who filed form 1040EZ. Until the Tax Cuts and Jobs Act of 2017, the 1040EZ was the shortened version of the IRS’s standard Form 1040 (the standard form for income tax). Since 2017, the 1040EZ form has been discontinued.
Form 1040EZ was a condensed version of Form 1040, intended to provide taxpayers with basic tax situations a fast and easy way to file their income taxes. To use the form, a taxpayer must have had taxable income of less than $100,000, less than $1,500 of interest income, and have claimed no dependents. While it was offered, the 1040EZ was the first tax form first-time filers ever completed.
State Telefile Systems
Many states also allowed telefiling, following the lead of the federal government. Their processes and technology were largely the same as those used by the IRS.
Residents of the state of Pennsylvania can still file their taxes over the phone. Some states, including Wisconsin, allow business filers to file their sales and use tax returns over the phone.
Eligible taxpayers automatically received the federal Telefile package in the mail.
Why Is Telefile No Longer Available?
In the eight years the IRS allowed telefiling, it was marketed as a convenient service for taxpayers with simple tax returns. The Telefile service worked by letting taxpayers dial the numbers on their tax return directly into the phone to report their income. It was feasible only for the most straightforward returns.
The IRS replaced Telefile with electronic filing in 2005.
Who Was Eligible for Telefile?
If you are curious whether your state still offers a telefiling system, go to the state revenue, treasury, or tax authority webpage, or search your state's name and the word "telefile" in an internet search engine.
E-filing allows individuals to submit their tax returns over the internet using IRS pre-approved tax preparation software. Over the last several years, e-filing has increased in popularity and is now the most common way individuals file taxes.
Beyond the convenience for filers of being able to file from the comfort of their home, e-filing saves the IRS time and money by transmitting tax data directly into the agency's computers. This is an improvement over the old system where individuals would mail their returns directly to the taxing authority or have a preparer do so.
E-filing has significantly reduced the possibility of keying and input errors and speeds up the process considerably.
Another benefit is that when e-filing, the tax filer receives a confirmation or rejection notice within 24 hours of transmitting the electronic documents. That confirmation is proof that the IRS received the tax return and it is in process. A rejection is a notice to the taxpayer that their form has not been accepted by the IRS. In most cases, this is due to a blank box or some other obvious error that can be corrected and refiled.
All taxpayers can now use the IRS Free File site to download the current forms if they choose to do their own taxes. In addition, any taxpayer whose adjusted gross income in 2020 was $72,000 or less can use their choice of professional tax preparation services that partner with the IRS. This service is free for federal filing, although a fee may be charged for your state filing.