Electronic Filing Improvement and Logistical Efficiency Act of 2025

This bill amends the Internal Revenue Code to improve the electronic filing process for employment taxes. It requires the IRS to create a fully automated electronic filing system for employment tax returns, provides a tax credit for employers who file electronically, and imposes a user fee on paper filings.

Sec. 3, Electronic filing for employment tax returns: Within one year of enactment, the IRS must provide employers a fully automated electronic process for all filing and payment requirements for employment taxes under subtitle C, including amended returns. The IRS must first focus on making Form 941-X available and ensure the process is fully automated and the most convenient and efficient means of filing.

Sec. 4, Electronic filing tax credit for employers: A new tax credit is created for employers who file quarterly employment tax returns electronically. The credit is $1,000 for the first calendar quarter all returns and payments are made electronically, and another $1,000 for one elected quarter in the following year. The credit is limited to the amount of applicable employment taxes and can be carried forward. If an employer later fails to file electronically, the credit is recaptured, with exceptions for extraordinary circumstances like lack of broadband access. The credit does not apply to government entities.

Sec. 5, User fee for paper filing of employment taxes: The IRS must impose a $250 user fee on each paper-filed quarterly or annual employment tax return. Exceptions are allowed where electronic filing is not feasible, such as for employers not required to file quarterly, first and second-time paper filers (with a warning), those lacking broadband access, emergency situations, identity theft victims, and other circumstances. Third-party providers who file at least 99% of returns electronically are exempt from the fee.