Michael,
Great question. I always look at Google's Keyword planner to see how it treats it. Couple things I noticed. 1) Google doesn't see a difference between lower-case and uppercase "E" in e-file. 2) Google lists 30 exact match searches for 1099 e-file software and none for 1099 efile software.
I would probably go with "e-file" as the target keyword, and perhaps use "efile" in the text and alt-image text, just as a backup.
Eric