The Electronic Filing Improvement and Logistical Efficiency Act of 2025 aims to modernize how businesses file employment tax returns with the IRS by transitioning from paper to electronic filing. Within one year of enactment, the IRS must create fully automated electronic filing systems for all employment tax returns, with priority given to amended quarterly returns (Form 941-X). The bill provides two incentives to encourage adoption: a $1,000 tax credit per calendar quarter for employers who electronically file their employment taxes for the first time and again in the following year, and a $250 fee imposed on businesses that continue to file employment tax forms on paper beginning two years after the law takes effect. The legislation includes exceptions for small employers, rural businesses without broadband access, and genuine emergencies, as well as protections for payroll service providers that already file electronically for 99 percent of their clients, ensuring that compliance burdens fall primarily on businesses choosing to remain on paper systems.
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