FTA Task Force on Electronic Data Interchange: a status report.

• Author: Davila, Manuel
• Position: Federation of Tax Administrators

In October 1994, members and staff from a number of professional tax organizations joined together in a project now referred to as the Task Force on Electronic Data Interchange (EDI) Audit and Legal Issues for Tax Administration (hereinafter referred to as "the Task Force" . Brought together under the auspices of the Federation of Tax Administrators FTA, Task Force participants were drawn from the FTA, the Multistate Tax Commission (MTC), the Institute of Property Taxation (IPT), the Committee on State Taxation (COST), and Tax Executives Institute (TEI). The objective of the Task Force is to:

Submit a final report providing (a)

an explanation and background of

electronic data interchange, (b) its

impact on the state tax audit and

tax administration process, and (e)

recommendations to be provided

to the governing bodies of FTA,

MTC, COST, IPT, and TEI....

The underlying premise of the Task Force is that, as a collaborative effort of business taxpayers and state tax administrators, its efforts will persuade the States to adopt, in whole or part, rules and procedures reflecting its recommendations. The Task Force, however, is not charged with reconciling or harmonizing the possibly divergent views of its constituent members on discrete issues because, as a collaborative effort, its interim or final reports likely will not fully represent the views of the members or member organizations. Hence, none of the conclusions reached, or recommendations made, should be ascribed to individual members or their organizations, though obviously there exists hope that a consensus will be attained on one or more issues. Moreover, each State remains free to develop EDI guidelines that differ from those adopted and recommended by the Task Force.

1. Organization of The Task Force

   The Task Force is composed of a Steering Committee and two Work Groups. The Steering Committee, chaired by New Hampshire Tax Commissioner Stan Arnold, provides general direction to the Task Force, identifies the legal and audit issues to address, provides timetables and deadlines, etc. The 22-member Steering Committee is evenly divided between representatives from the state tax organizations (FTA and MTC) and business taxpayer organizations (IPT, COST, and TEI).

   Two Work Groups, also composed of representatives from business taxpayers and state tax administrators, are charged with fleshing out the issues and developing working recommendations for Steering Committee consideration. The Work Group on Recordkeeping and Legal Issues was assigned the task of developing a proposed model rule or regulation relating to the maintenance, retention, and availability of electronic business, tax, and accounting records for state tax audit purposes. This group will also address certain...