Dropping signature requirement will increase electronic returns

The head of a tax industry trade group told a congressional panel earlier this month that the Internal Revenue Service could expand electronic filing of tax returns if the requirement that the returns be submitted with a handwritten signature were eliminated.

"Virtually every other element of electronic commerce is moving away from older practices that did require handwritten signatures " said Michael Mango president of the Council for Electronic Revenue Communication Advancement a group that advocates electronic filing at an April 17 hearing of the National Commission to Restructure the IRS. "In their place PIN codes and other verification methods have gained acceptance as we all know very well."

Although federal law requires taxpayers to complete their tax returns with a handwritten signature the commission is reconsidering this mandate as it mulls over methods to encourage more electronic returns. Most existing IRS electronic filing programs require taxpayers to send in forms with their signatures after transmitting their tax returns digitally.

The IRS says that the signature requirement is a major barrier to receiving more returns electronically. Currently only the Telefile program which allows taxpayers with simple returns to submit them over the telephone is completely paperless. That system uses personal identification numbers assigned by the IRS to identify the person filing the return.

In an interview Mango said the question of how best to authenticate returns without signatures needs to be explored but that officials are not likely to pursue the issue until the law is changed.As of April 18 the IRS had received 18.8 million electronic returns from individuals and businesses compared with 14.7 million at the same point in 1996.

In July the commission - whose members include lawmakers tax attorneys accountants federal officials and technology executives - plans to issue recommendations for how IRS operations should be reformed. How the IRS uses information technology is expected to be a major focus of the report.

In a paper prepared at the commission's request the Information Technology Association of America echoed earlier recommendations for ways the IRS can better manage its IT programs. The ITAA said the agency needs to tie its modernization programs tightly to its business processes.

Testifying before the commission for ITAA Milton Cooper president of Computer Sciences Corp.'s Systems Group said "When the role of technology is well-defined and managed jointly with business objectives " the IRS would be better able to attract and retain the employees and contractors it needs to update its systems in the future.

At an earlier hearing IRS chief information officer Arthur Gross said the agency needed to build the "intellectual capital" necessary to manage modern IT programs. But Cooper said the IT challenges facing the IRS are not much different from those facing corporations. He said a survey his company conducted among IT executives around the world found their concerns "are very near to those or mirror those that we're discussing today."


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