General Electric filed an electronic tax return earlier this month, turning what would have been 24,000 pages of paper into about 240 megabytes of information. It took GE 30 minutes to send the document to the Internal Revenue Service, and within an hour, the company had verification that its return had been received, said GE’s John Samuels, at a joint press conference held Wednesday by GE and the Internal Revenue Service.
Historically, GE has been the nation’s largest tax filer in terms of pages, noted Bruce Ungar, the deputy commissioner for IRS’s Large and Mid-size Business Division. Given the “stature, size, sophistication, and complexity of GE['s filing], we believe other corporations will [take] notice and find it hard to discount what GE achieved,” added Ungar.
GE files thousands of returns every year, originating from every country in the world, and every U.S. state, as well as thousands of city returns.
This is the first year that certain large corporations with assets in excess of $50 million, and that file at least 250 returns annually, are required to file electronically. The IRS expects more than 10,000 of these large corporations to “e-file” by the extended filing date of September 15. So far, 4,750 large corporations have filed electronically for the year ending December 31, 2005, including 3,042 with assets of $50 million or more.
GE began working on its e-filing project a year ago, “immediately” after the company filed its 2004 returns, said Samuels, the company’s senior tax counsel. The conglomerate is currently involved in a effort to reduce its use of paper documents, and the e-filing project was another step toward that goal, added Samuels.
GE spent between $500,000 and $1 million to get ready for electronic filing, which required about seven full time employees devoted to the project, in addition to the staff of 50 who already work on corporate tax returns. Samuels said he expects the savings derived from the e-filing to amount to “many millions of dollar in out-of-pocket costs.” The decrease in costs will come from GE being able to avoid transcription of its electronically-stored data onto IRS paper forms.
He also noted that non-direct savings will be captured from audit efficiencies — such as a reduction in transcription errors and the attendant audit notices. But Samuels said it was too soon to tell what how much the extra savings would total.
Most of the changes GE made to accommodate the electronic filing came in the form of developing new IT systems, which were built in-house. GE took the project in-house, said Samuels, because, given the size of the effort and the aggressive 12-month timetable GE set, information technology vendors were not ready, or not large enough, to handle the project.
Although Samuels said there were no major snags along the way, he did assert that, “any change is difficult.” He gave a nod to the IRS, calling the agency “spectacular” in terms of cooperating with GE from the project’s get-go, and helping out with “bumps in the road.” In fact, said Stephen Francis, GE’s IT lead on the project, the company had to “reallocated resources and investments starting in April of last year” … but there were “no concerns,” regarding whether GE would meeting early filing deadlines.
The advice from Samuels to other taxpayers who are going paperless: “Start early.”