Electronic Filing Improvement and Logistical Efficiency Act of 2025

Increased efficiency for employers: The IRS must create a fully automated electronic process for filing and paying all employment tax requirements, specifically focusing on the adjusted employer's quarterly Federal tax return or claim for refund (Form 941-X) (Section 3).

Financial incentive to switch to digital: Employers can receive a $1,000 credit for the calendar quarter in which they first make all their returns and payments electronically (Section 4(a)(1)).

Continued support for digital transition: Employers can elect to receive an additional $1,000 credit for one calendar quarter in the year following their initial switch to electronic filing (Section 4(a)(2)).

Protection for those with limited access: Exceptions to both the credit recapture and the paper filing user fee are available for employers who lack ready access to broadband or face geographic barriers, such as those in rural areas, or for those facing emergency situations (Section 4(c)(2)(A) and Section 5(b)(1)(C-D)).

Protection for victims of crime: Exceptions to the paper filing user fee are available for recent victims of identity theft or cybercrimes (Section 5(b)(1)(E)).

Financial penalty for continuing paper filing: The Secretary is required to impose a $250 user fee on any quarterly or annual return submitted by means other than electronic filing (Section 5(a)).

Risk of losing previous credits: If an employer receives an electronic filing credit but then fails to make a subsequent return or payment electronically, the tax for that subsequent quarter will be increased by the amount of the credit previously allowed (Section 4(c)(1)(A)).

Loss of future credit eligibility: If an employer's credit is recaptured because they failed to file electronically, they are not allowed to receive any more electronic filing credits in subsequent quarters (Section 4(c)(1)(B)).

Exclusion of government entities: The electronic filing tax credit is not available to the United States Government, any State government, or any of their political subdivisions or agencies (Section 4(e)(2)).