Last updated: January 24, 2024

3 Benefits of Automating Income Tax Filing

Here's a look at how implementing software to automate income tax processes benefits local governments, payroll providers, and individual filers.
Posted by GovOS Team
Taxpayer filling out government tax forms

Income tax comes with its fair share of complexities which can make bringing the process online feel daunting. To better understand how local governments—and their communities—benefit from implementing tax filing software, we did a deep dive into the biggest challenges of going digital. Our findings revealed that paper-based processes and other time-consuming, manual steps demand a significant amount of time and resources.

In this article, we take a look at three critical areas where a tax filing solution can enhance workflow efficiencies, boost accuracy, and speed up completion times. Here’s a look at some of the benefits of bringing the income tax process fully online.

1. Simplify the Process for Individual Filers

Even simple tax filings have the power to create delays, thanks to illegible handwriting, missing information or documents, or just general backlog during peak filing times.

Studies reveal that taxpayers increasingly prefer to file their taxes through online methods for convenience and efficiency. In fact, we have seen a 95% adoption rate for paperless opt-in of user data in our other tax filing systems. When offered the option, taxpayers are choosing to file their taxes online in an overwhelming majority.

With this in mind, our initial focus was to identify all the points at which manual data entry takes place in the remittance process and replace those points with online forms, automated calculations, automated field entries, and required fields (fields that won’t allow a form to be submitted if left blank). Errors at any stage create more work for the staff who need to follow up with taxpayers to clarify the data points or request they resubmit entirely—a worst-case scenario.

On top of making the submission process easier, it’s also easier for filers to understand how much they owe. Often with paperwork and manual processes, taxpayers can become confused about how much they owe. With our tax filing solution, we’ve ensured this information is clearly displayed on the submission form, enabling taxpayers to remain easily compliant without any extra work.

2. Streamline the Process for Payroll Providers

When thinking about digitizing the tax filing process, it’s easy to focus solely on the individual taxpayers. But we can’t forget about the role that payroll providers play in the tax remittance process as well as their needs and challenges. The same mistakes that commonly occur in individual filings are magnified when handling multiple business filings simultaneously. Errors in service provider submissions result in agencies having to juggle reconciling numerous incomplete returns.

In our research, we found that payroll service providers are also unhappy with existing income tax systems. Some were reluctant to use paper or follow the paper form guidelines, leading to more incomplete or incorrect submissions and increased time spent seeking clarifications.

We’ve tackled this concern in our tax solution by providing the ability for payroll providers, like ADP, to submit multiple filings in one go. Providers are also given the option to ‘Save and Continue’ if they lack some of the required information during submission preparation. Additionally, we’ve created an ACH credit specification guide that is tailored to the specific needs of each jurisdiction we partner with, helping to further make the online payment process even easier.

3. Take Care of Every Accounting Need

We designed our tax solution to be adaptable to address various taxpayer needs. Some key features include:

  • Accessible Overpayment Management – Taxpayers can monitor and handle all overpayments themselves and if needed, apply any overpayments to their current year’s return. Should they have a credit, they can also apply the credit as an overpayment to the following year’s return.
  • Easily Manage Extension Requests – The days of paper-based extension requests and manual calculations are over. Taxpayers can now file extensions online by the original gross receipts/net profit due date and use an automated form to calculate and remit their extension payment.
  • Business Tax AND Payroll Tax – For businesses using net income on net profit returns, an audit module has been added to review deductions, communicate discrepancies, and collect dues online. The platform also seamlessly integrates W2 reconciliation, enabling jurisdictions to identify and address incorrect withholdings per employee and collect due amounts online.

We covered a lot, but what is our top insight from this process? Managing income tax is a tedious, complex task, and we have nothing but respect for those who have been doing it manually for all these years. The GovOS system can streamline operations for local governments, aiding in digitizing a crucial tax element and thus enhancing life for citizens and businesses.

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