IRS promotes efforts to enable online tax filing
Internal Revenue Service (IRS) officials said on Wednesday that the agency is moving ahead with efforts to allow individuals to file their taxes online, a project that will be aided by the unveiling of a new Internet site in January.
The IRS signed an agreement with a consortium of private companies last month, and Terry Lutes, director of the agency's Electronic Tax Administration, told a gathering of the Electronic Tax Advisory Committee that the IRS soon will offer a Web site where citizens can obtain free online-tax-filing services.
The new site for the Free File Alliance, a group of tax software companies managed by the Council for the Electronic Revenue Communication Advancement, will provide users with options or packages of online tax services from consortium members.
The agency said nearly 47 million individuals already file tax returns electronically, and it expects an additional 1.3 million users for the new services. Currently, the IRS is completing efforts to test the usability of the e-filing site, a key goal of the Bush administration's 24 e-government initiatives.
Lutes and Fred Forman, who oversees the IRS' computer modernization initiative, said the agency is succeeding in its congressionally mandated modernization efforts, as it moves to new phases of the multi-year effort to update technologies for processing tax forms. Under a 1998 law, the IRS seeks to have 80 percent of its individual tax returns filed electronically.
The tax administration also is scheduled to deploy some e-services by spring or early summer, allowing taxpayers to register online and update their personal information. Additionally, the agency next year plans to enable citizens to check the status of their tax refunds.
The first phase in a pilot test of the tax administration's computer infrastructure will enable a host of new services that rely on increased security. And when the system is deployed in 2003, businesses will be able to apply online for an employer identification number (EIN).
"We're actually beginning to see some real steps to make life easier for businesses," Lutes said.
The paper-based process for an EIN application can be lengthy and burdensome for fledgling companies, said Forman, who noted that a business is not official until it has a number.
Forman also outlined major IRS projects to rebuild the agency's underlying technology infrastructure. While he said the effort is proving extremely complex, he noted that the agency is beginning to make some inroads into converting the IRS Master File-a decades-old database containing individual taxpayer information-to a new Customer Account Data Engine that has been designed to store and compute taxpayer information.
When more of the e-filing services are operational, Lutes said the agency will begin reviewing the services to help the IRS learn why more individuals are not using them.