IRS awards contract to develop public-key infrastructure

The IRS has awarded a contract to VeriSign Inc. to create and test a public-key
infrastructure, a key piece of the service’s future systems security architecture.

Under a two-year contract, the Linthicum, Md., company will test whether a PKI will
provide secure transmission of employee e-mail within the IRS.

If the test is successful, the IRS will extend the contract for another year to test
the PKI for the electronic filing of tax returns by IRS employees, said Stephen Holden,
the service’s national director of electronic program enhancements.

The contract has a base year worth $23,815 but could be worth $433,510 if the IRS
exercises all its options in Year 2.

The IRS needs PKI technology to manage digital signatures and key certificates.
VeriSign will establish procedures for generating certificates containing a user’s
identification, public encryption key and a time-date stamp.

Relying on a dual system of public and private keys, users will control their private
keys and only recipients with the corresponding public keys can access the messages.

“The PKI could eventually let taxpayers file directly with the IRS,” Holden
said, as well as pay taxes and exchange private data directly. Online filing now only lets
taxpayers send their returns to professional tax preparers, who then send them to the IRS.

Of the 24.5 million people who filed electronically last year, 17.6 million used tax
preparers; more than 6 million filed over the telephone through the service’s
TeleFile program.

The IRS will let some taxpayers pay taxes online for the first time next year, Holden
said. Last year, people could get refunds through electronic funds transfers but
couldn’t pay electronically if they owed taxes.

“Authentication will not favor a particular filing method but will offer taxpayers
more choices,” Holden said.

The IRS also hopes that a PKI will let taxpayers e-mail personal tax questions to the
IRS, rather than calling the service’s toll-free number and waiting for a customer
service representative.

The IRS also will use the system so that taxpayers can order a copy of the records of
the transactions on their accounts, via secure e-mail, Holden said.    


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