IRS modernization and E-filing strategies.

• Author: Martin, Susan W.

The IRS's new mission statement sets forth that the Service is to provide America's taxpayers with top quality service, by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. Modernization efforts already underway to assist the IRS in this mission include reorganizing the Service into operating units based on taxpayer (rather than IRS) function.

The proposed operating units are:

* Wage and investment;

* Small businesses and supplemental income;

* Middle market and large corporations;

* Tax-exempt organizations;

* Core functions (national office) and shared services; and

* Distinct units (advocate, counsel, criminal investigation, etc.).

In addition, the Service is upgrading and redesigning its major information technology systems, for completion in 2003; goals for 1999 include completion of year 2000 (Y2K) changes, as well as new electronic (e-filing) initiatives. Top IRS officials are leading these efforts, starting with Commissioner Rossotti; Bob Barr, Assistant Commissioner for Electronic Tax Administration (formerly Vice President of Intuit Corp.); John LaFavre, Deputy Commissioner for Modernization (formerly Tax Commissioner in Kansas, Maine and Montana); and Val Oveson, National Taxpayer Advocate (formerly Tax Commissioner in Utah and currently an active member of the AICPA's State & Local Taxation Committee). The management strategy is to recruit talent from outside the agency to lead the new operating units, and to pair those individuals with IRS managers to effectuate changes in a short period of time.

The IRS Restructuring and Reform Act of 1998 (IRSRRA '98) charged the Service to:

1. Make paperless filing the preferred and most convenient means of filing Federal tax and information returns;

2. Achieve the goal of having at least 80% of all such returns filed electronically by 2007; and

3. Encourage the private sector through cooperation to increase e-filing of such returns.

   The IRSRRA '98 directed the IRS to establish a plan to eliminate barriers, provide incentives and use competitive market forces to increase e-filing.

   The IRSRRA '98 also created the Electronic Tax Administration Advisory Committee (ETAAC) to report to Congress annually on the Service's progress in achieving these goals.

   The IRS Electronic Tax Administration (ETA) released its strategic plan for e-filing on Dec. 3, 1998. It has two primary goals:

1. An overall goal of achieving 80% e-filing of...