But since one person's taxes often have little effect on the society-wide outcome, those broader rewards are little affected by each taxpayer's compliance with the tax laws. That's where electronic filing comes in. Although private vendors sell it as a benefit to the client who might get a refund check back faster, the principal beneficiary is the IRS and the public that pays the agency's bills. It turns out that the IRS spends substantial sums of money handling each tax return and then copying the data into various databases. First, it has to physically open and sort the paper returns.
Many returns are then copied or scanned.
For returns that are handwritten and especially for those that are barely legible, even a sophisticated scanning operation often can do little more than take a picture of the return. To digitize part of the return, thousands of IRS employees must sit down and type in the numbers or cross-check numbers that were digitized from a scan. Next, many returns not electronically filed will be found to contain mathematical errors and incomplete entries. So the IRS must generate millions of form letters going back to taxpayers asking them to reconcile numbers that are inconsistent or don't add up. Then the IRS must handle the responses and amended returns when they come back.