IRS Struggling To Pay For Development Of Business E-Filing

by Mike Godfrey, Tax-News.com, New York

14 February 2003

The IRS's Project Manager for the agency's 'Expanding Electronic Tax Products for Businesses' initiative is Mary Ellen Corridore, and she spoke at the e-Gov Web-Enabled Government conference in Washington, DC, this week, explaining that the IRS will have to take a step back from its existing work in order to develop a more comprehensive approach to the problem of e-filing for businesses.

This is due to the increasing complexity of the systems needed to accommodate the needs of business. One of the main projects so far has been work on on-line filing of the 1120 income tax form, and this also will be thrown back into the melting pot while a new and more up-to-date scheme is developed.

However, the work done will not be wasted, said Corridore. The IRS has focused on using Extensible Markup Language in its work on the 1120, she said, and this will make it easier for businesses to file multiple returns, including the many attachments that are often included in the returns. The tax-specific XML forms developed also will help to validate a lot of the information automatically, saving time for IRS employees, Corridore said.

The problem for the IRS is that its electronic filing infrastructure, developed largely with an eye to individual returns, at which indeed it has been successful, cannot yet support the massive returns often needed for businesses - one exmaple given by Corridore involved 36,000 pages in just one return.

"We knew that we needed to develop a whole new modernized e-file system," Corridore said. Not least among the problems is that companies are still obliged to apply for e-filing by 'snail' methods.

It seems that no-one expected the infrastructure enhancements to be so extensive, so that no budget provision was made for it. Now, with the IRS's budget under constant attack and scrutiny from an unsympathetic Congress, the first priority is to find more money to support the business e-filing development. A team is working with the Office of Management and Budget to find interim funding while revising the business case to fit the modernization requirements, Corridore said.

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