IRS Electronic Advisory Committee Delivers Report To Congress

by Mike Godfrey, Tax-News.com, Washington

01 July 2009

The Electronic Tax Administration Advisory Committee (ETAAC), which provides feedback on the development and implementation of the Internal Revenue Service’s electronic tax administration strategy, has presented its 2009 Annual Report to Congress.

The report includes 10 recommendations to advance the use of electronic filing. For example, the report recommends the IRS require all tax preparers who file at least 200 returns a year to use e-file. The report also calls for continued modernization of IRS systems as well as collaboration between the IRS and industry regarding software standards.

“ETAAC plays a significant role in IRS efforts to improve the taxpayer’s experience via e-file and the Internet,” said David Williams, director of Electronic Tax Administration. “ETAAC feedback helps the IRS shift more returns from paper to e-file, which is a top priority.”

The 14-member panel provides an organized public forum for discussion of electronic tax administration issues and the overriding goal that paperless filing should be the preferred and most-convenient method of filing tax and information returns.

ETAAC submits an annual progress report to Congress each June. The IRS Electronic Tax Administration created the ETAAC in 1998 as required by the IRS Restructuring and Reform Act of 1998 (RRA 98). The report is the result of research and analysis as well as meetings with senior IRS executives.

RRA 98 requires that ETAAC annually report to Congress on: the IRS’ progress in meeting the goal to receive electronically 80% of tax and information returns; the status of the IRS’ e-filing strategic plan; legislative changes that would assist the IRS in meeting the 80% goal; and the effects e-filing tax and information returns would have on small businesses and the self-employed.

The IRS Oversight Board (Board), also established via RRA 98, has among its duties a similar reporting responsibility with respect to advancing electronic tax administration.

According to the report, the IRS made “significant progress” increasing the e-file rate for individual returns, particularly in do-it-yourself online filing. Through the end of the 2009 primary filing season, this segment grew by 19% over the 2008 season. Preparer e-filed returns, on the other hand, were down by just less than 1%.

ETAAC estimates strong gains will be made for the 2009 calendar year for business e-file, while minimal gains are anticipated for employment returns, 1099-MISC returns and fiduciary returns. The 2009 calendar year overall e-file rate for all major form types is estimated at 59%. To reach the 80% goal, an estimated 57 million additional returns would need to be e-filed, including 16 million individual returns.

The report also notes that the IRS has made progress in establishing the foundation to develop a new e-strategy. “Principally, the Advancing e-file Study and progress towards an over-arching Enterprise E-Strategy indicate that the IRS is on the right path,” the report states.

In summary, ETAAC’s recommendations are:

  • Congress should enable the IRS to require preparers to e-file
  • Congress should fund, and the IRS should complete, the “four pillars” of its Modernization Program
  • The Data Strategy project should be comprehensive
  • The IRS should modernize preparer e-services
  • The Electronic Services Strategy should be an enterprise priority
  • The IRS and industry should collaborate on tax software standards
  • The IRS should rebrand e-file
  • The IRS should develop an operational process for e-file rejects
  • The IRS should renew the Free File Alliance agreement
  • The IRS should ease the signature burden for information return sharing

"The IRS is making great progress on its strategic planning efforts toward reaching not only the 80% e-file goal established by Congress but also toward providing the next generation of electronic services for taxpayers, tax preparers and other stakeholders," said Chris Beach, ETAAC Chairman. "ETAAC looks forward to working with the IRS on helping to advance these important electronic tax administration opportunities."

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