TEI urges phased implementation of IRS e-filing mandate: December 20, 2005.

PositionTax Executives Institute

On December 20, 2005, TEI sent the following letter to select Treasury officials and the chairs of the congressional tax-writing committees concerning the Internal Revenue Service's mandate to require the electronic filing of large corporate tax returns. The letter was prepared under the aegis of TEFs IRS Administrative Affairs Committee, whose chair is Kelly A. Nall of Electronic Data Systems Corporation.

As the preeminent organization of in-house tax professionals, Tax Executives Institute writes to express concern about the recent Internal Revenue Service mandate requiring large corporations to electronically file their corporate tax returns (beginning in 2005). This mandate, issued last January without proper consultation with affected taxpayers, will impose significant burdens on the business community without any assurance that the IRS will have adequate systems, procedures, and personnel in place to receive and process the data and capabilities to effectively analyze that data to fulfill its audit and compliance responsibilities. The Institute believes the subject is an appropriate one for congressional oversight to ensure there has been a proper balance of taxpayer burden and government benefit.

Let there be no misunderstanding--Tax Executives Institute and its almost 6,000 members support the goal of increasing the IRS's use of technology including its ability to effectively process e-filed returns. Further, we agree that a properly designed and implemented e-filing process will advance key IRS objectives, namely, providing the IRS with accurate and timely return information, reducing audit cycle time, and achieving currency in those audits.

Mandating a laudable goal, however, does not ensure its fair or timely implementation. TEI believes that the IRS's e-filing mandate is ill-advised because it will impose unnecessary costs on taxpayers and may threaten the orderly processing of returns for the 2006 filing season. It flows, we regret to say, from the insular, largely unilateral process employed by the IRS in issuing the mandate, a process that stands in marked contrast to the collaborative, customer-service approach the agency has productively used in other areas (and that is consistent with the goals undergirding the IRS Restructuring and Reform Act of 1998). In this connection, we note that the Internal Revenue Service Advisory Council's recent recommendation to delay the e-filing mandate by one year was rejected by the Commissioner. Finally, we believe...

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