IRS regroups on business filing

E-Government Strategy

The Internal Revenue Service's e-government initiative to provide online tax filing for businesses has become so much more complex than leaders expected that the agency is writing a new business case to support the initiative's needs.

The Expanding Electronic Tax Products for Businesses initiative's biggest project is enabling companies to file their corporate income tax form 1120 electronically. While the initiative has progressed on many fronts, it will have to take a step back as it overlaps with and moves into the overall IRS business systems modernization effort, said Mary Ellen Corridore, project manager for the initiative.

She was speaking Feb. 11 at the e-Gov Web-Enabled Government conference in Washington, D.C.

For the 1120s, the IRS has focused on using Extensible Markup Language to make it easier to file multiple returns and 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.

However, the IRS' electronic filing infrastructure cannot yet support these large returns, she said. Millions of individuals are already filing their income tax forms online, but the corporate forms can be up to 36,000 pages just for the form response, she said.

"We knew that we needed to develop a whole new modernized e-file system," Corridore said.

Enhancing the IRS' infrastructure originally was not a part of the business case, so expanding the initiative's scope means that the project team must look at new funding mechanisms and a new oversight process, she said.

The initiative team is working with the Office of Management and Budget to find interim funding while revising the business case to fit the modernization requirements, she said.

The initiative also expects to launch another project within the next month. The Internet Employer Identification Number (EIN) project will allow companies to apply for and receive their EINs online, cutting down on time and work at both ends of the process, Corridore said.

Right now, companies must apply by fax or mail. On average, the fax process will take four days, and mail will take 10. By moving the process to the Web, it will take only five seconds, she said.