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IRS's support of electronic return originators.

As the rest of the financial world has moved toward electronic transactions, the IRS has been doing likewise. During the past several years, there has been significant progress, a great deal of which is directly attributable to the over 80,000 Electronic Return Originators (EROs), including countless CPAs and EAs who nationally filed more than 18 million tax returns electronically on behalf of their clients this past filing season. With the increasing emphasis placed on Electronic Tax Administration (ETA) by Congress, by the National Commission on Restructuring the Internal Revenue Service and by the National Performance Review, EROs will continue to play a significant role in the future success of this key area of the Service's operations.

Servicewide, the IRS has encouraged all parties involved in the preparation and transmission of tax returns to apply to become EROs. An ERO may be a for-profit or a not-for-profit organization in the private or public sector that chooses to provide electronic filing services. Any organization or individual who wishes to obtain more information about the application process to become an ERO should contact the local district ETA coordinator.

The recently enacted IRS Restructuring and Reform Act of 1998 establishes an extremely ambitious objective of 80% of all tax and information returns being filed electronically by 2007. The law further requires that the Service develop a strategic plan for ETA to eliminate barriers, provide incentives and use competitive market forces to increase electronic filing gradually over the next 10 years. To the extent practicable, the plan is also to provide that all returns prepared electronically for tax years beginning after 2001 should be filed electronically.

To make significant progress toward achieving these goals, the IRS plans to fully leverage the provisions contained in the legislation, especially those involving the promotion of electronic filing and any use of incentives. Bob Barr, the Assistant Commissioner (Electronic Tax Administration), has repeatedly stated that tax practitioners authorized to electronically file tax returns to the Service must be serviced, recognized, managed and motivated as ETA product and service distributors. Much as the private sector employs store front operations (whether independent, franchise or corporate owned), the IRS depends on tax practitioners to promote electronic filing and payment to taxpayers. The Service will seek to support EROs with national advertising, promotional kits, education and training, secure communications, management information systems and various product and service incentives (depending on an ERO's success in promoting the IRS e-file program and achieving a high level of accuracy).

IRS top management has recognized that (1) EROs, financial institutions, large employers and payroll service providers are its distribution channels for distributing certain ETA products and services to taxpayers and that (2) field ETA coordinators are the Service's sales/account management force, primarily responsible for interacting with distributors. As account managers, the ETA coordinators' job is not only to increase the number of distributors in their districts and the volumes of returns transmitted electronically, but also to provide these distributors with the information, products and support they need to be effective.

Like the private sector, the IRS must recognize that some of its distributors concentrate huge volumes of transactions, have unique needs and should be serviced accordingly. Each of these limited number of distributors (whether ERO, large employer, financial service organization, trade association, software publisher, payroll service provider or other) will be serviced by a National Account Manager. These account managers will be responsible for meeting the needs and resolving the problems of the firms in the National Accounts Program.

The Service is currently developing a preliminary strategic plan which will further explain its plans in this area. This plan will clearly articulate ETA's mission, strategies and goals for revolutionizing how taxpayers transact and communicate with the IRS. The strategic plan will describe the substantial market opportunities that exist for ETA, as well as the significant challenges that must be addressed if electronic filing, payment and communication are to become the preferred and most convenient means of taxpayers' interaction with the Service.

In addition, the IRS has established an Electronic Tax Administration Advisory Committee to provide an organized public forum for discussion of ETA issues in support of the overall goal of encouraging taxpayers to transact and communicate electronically with the Service. The advisory group, which will be responsible for providing input into the development and implementation of the strategic plan for ETA, comprises representatives from the small business community, the tax practitioner, preparer and computerized tax processor communities and the electronic filing industry. The formation of this committee was supported by Congress and is included in the recent IRS restructuring legislation.
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Author:Johnson, Robert T.
Publication:The Tax Adviser
Date:Oct 1, 1998
Previous Article:Increased protection for innocent spouses.
Next Article:Taxpayer protections and rights - 1998.

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