IRS plans a system for electronic transcripts

IRS plans a system for electronic transcripts

By Shruti Dat'

GCN Staff

The IRS Office of Electronic Tax Administration wants to automate the labor-intensive process of providing taxpayers with copies'known as transcripts in tax speak'of their records.

The transcript automation initiative is in response to the congressional mandate that the IRS process 80 percent of its transactions electronically by 2007.

ETA will issue a request for proposals late this year or early next to develop an electronic transcript prototype. The IRS will fine-tune the system during a one-year pilot that the agency wants to begin in April. It will base its solicitation on eight responses it received to a request for information.

'This effort has gone on for four years,' said Sherrill Fields, the IRS' national director for the Electronic Program Enhancement Office. 'We looked at the internal process of the transcript delivery system because it did not provide good service. This system stuck out as something that could be automated.'

Taxpayers now have two options'submitting forms by mail or visiting an IRS customer service center'when requesting transcripts. Taxpayers seek copies of IRS records for a variety of purposes: loans, grants, subsidies or other monetary guarantees.

The IRS receives 2 million such requests annually. If a taxpayer mails in a form, the turnaround time is three weeks. If a taxpayer visits a service center, an IRS representative can process the request in 15 to 20 minutes. 'But we just don't have the manpower' to handle all 2 million requests that way, Fields said.

Lag factor

For mailed transcripts, the lag time 'just doesn't fit into our economy now when the mortgage industry might want the information within 24 to 48 hours,' Fields said. The goal is to make such transactions simple, inexpensive, reliable and preferable to manual methods, the IRS said in its RFI.

A primary factor in designing a pilot for the electronic transcript delivery system is security, Fields said. The IRS must be able to protect personal data as well as be able to authenticate requesters and recipients of information, she said.

For the pilot, the IRS will require identification when a transcript is requested. The agency will test digital signatures, secured data links, smart cards and firewalls.

The agency also intends to use the system to release only necessary information. Now, for example, when a taxpayer authorizes release to a third party, nearly 200 lines of information are transcribed from the taxpayer's return. But the new system would provide just the 26 lines of pertinent data, Fields said.

IRS has four goals for transcript delivery

  • Accelerate the processing of tax record requests
  • Provide electronic authentication of information requesters and recipients
  • Offer a one-stop service
  • Reduce the amount of information released to third parties

For the pilot, the IRS will enlist 100 industry participants, including tax practitioners, financial institutions, mortgage lenders and credit bureaus. The agency also will limit the pilot to California so it can manage software support easily and reduce the training and costs to participants.

Participants must have available hardware and software, which the agency will specify in the RFP. Fields said the agency expects the one-year pilot to cost about $1 million.

The pilot will serve as a tool from which to learn, and the final electronic transcript delivery system will evolve from those lessons, Fields said.

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