Congressmen: EZ Tax Filing could violate A-76

The IRS is getting ahead of itself in its efforts to do more
electronically, some members of Congress contend.

Eight House Republicans last month sent a letter to the Office of Management and Budget voicing concerns that IRS efforts to expand its EZ Tax Filing project could violate OMB Circular A-76.

The letter cited basic tenets from the circular that the government should not compete with industry or provide a commercial service or product.

Rep. Randy “Duke” Cunningham (R-Calif.) led the charge. The letter’s other signers were GOP Reps. Christopher Cox, Darrell Issa and John T. Dolittle of California, Robert Ehrlich Jr. of Maryland, Mark Foley of Florida, Bob Goodlatte of Virginia and Jerry Weller of Illinois.

EZ Tax Filing, a program that lets the IRS receive individual tax returns electronically, is one of 23 initiatives that OMB outlined last year to foster e-government.

Business returns

Another e-government project the IRS is working on for OMB, the broadening of its Simplified and Unified Tax and Wage Reporting system (STAWRS), aims to expand online reporting services to businesses.

Terry Lutes, director of the IRS Electronic Tax Administration and the service’s e-government chief, said the lawmakers’ concerns are premature because IRS is still defining what changes it will make to the tax filing program.

“We are still exploring and looking at the project,” Lutes said. “We are working with OMB and Congress to make sure that we look into their concerns.”

The agencies participating in the 23 e-government initiatives last month had to submit business case studies to OMB.

“We are undertaking a business analysis and trying to make business sense of what will make successful EZ Tax Filing and STAWRS projects,” Lutes said.

OMB has reviewed the studies and sent the agency feedback and questions on the project, Lutes said.

The IRS will broaden STAWRS to offer electronic versions of Form 1120, for corporate tax returns, and Form 945, for employers who withhold taxes from nonpayroll payments such as pensions.

The IRS will design the expansion of the EZ Tax Filing project for individual taxpayers.

A 40-member IRS team is working with the Social Security
Administration, Federation of Tax Administrators, Labor Department, Small Business Administration, Health and Human Services Department, and state and local governments on the projects.

As it continues working with OMB on the EZ Tax Filing and STAWRS projects, the IRS also is forging ahead on other electronic initiatives. These include creating an employer identification number (EIN) Web application, formatting Form 941 in Extensible Markup Language and fine-tuning the redesign of its Web site launched last month.

An EIN lets employers apply for an ID number online. The IRS is enhancing the app’s security and adding quality checks.

Online power

This summer, the IRS also will roll out the first release of its e-Services project, Lutes said. The program will let tax professionals apply online for power of attorney. It also will let the IRS deliver transcripts containing taxpayer information to tax professionals via the Web.

The agency also plans to introduce its Security and Technology Infrastructure Release. Through STIR, the agency will develop an infrastructure for secure telephone and electronic interaction among employees, tax practitioners and taxpayers. The project will build a foundation on which other programs can run securely, Lutes said.

E-government is a top priority at the IRS, Lutes said. “We’ve got to drive up the volume of things done electronically,” he said. The administration “would like to see the projects now instead of 2010.”

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