E-Government Vision: Automated Tax Services Utilizing the Internet

1. E-Government Vision: Automated Tax ServicesUtilizing the Internet FTA FedState E-File Symposium May 2, 2000

2. Banks Mutual Funds Brokerage House Old Tax Process Taxpayer IRS Tax Information States Return FilingsNoticesCorrespondence IncomeInformation Employers andGovernment Agencies Tax Preparer

3. Banks Mutual Funds Brokerage House Current Tax Process Taxpayer IRS Tax Information States Return FilingsNoticesCorrespondence IncomeInformation Employers andGovernment Agencies Tax Preparer

4. Tax Services - What Are They? • Tax preparation and filing only one aspect of tax process • Rest of the process can and should be modernized • Provide better service to citizens • Taxpayers and their preparers • Reduce paper burden on government • Encourage usage of e-government services

5. Banks Mutual Funds Brokerage House Vision: Automated Tax Services Taxpayer IRS States Tax Preparer Return FilingsNoticesCorrespondence IncomeInformation Employers and Government Agencies

6. Vision: Automated Tax Processes • Who: State revenue agencies, the IRS, and the private sector • What: Create a system where all tax services are provided electronically • How: By working together in Public/Private Partnership

7. Vision: Automated Tax Services • All tax services handled electronically, including • Customer service inquiries • Compliance notices and resolutions • Payments • All tax types • Individual and business income taxes • Business taxes

8. Vision: Automated Tax Services • Complete adoption of e-filing hindered by other burdensome processes • Other factors still an issue, including: • Accept all individual income tax returns electronically • Add all business income and business tax returns • Authentication (make it truly paperless) • Built in costs/support issues • Build e-file benefit awareness • Taxpayers aware of service, not benefits • Building taxpayer benefits • These factors can be addressed in partnership

9. Vision: Taxpayer and Preparer Experience • W-2 and 1099 information delivered electronically to taxpayer or the tax preparer • Returns are completed - practically automatically • Returns are electronically filed with the IRS and State • IRS and State provide immediate acknowledgement and continuous status confirmations • Tax notices are sent electronically • Taxpayers/preparers respond electronically • Online and email Customer Service • Account information available to taxpayer and tax preparer year-round

10. Examples • Consider these possibilities: • Comprehensive tax return status • Replace paper notices • Electronic account management • Why? * Reduce taxpayer confusion and burden! * Provide GREAT customer service!

11. What: State sends continuous “real time” tax return status Return received Return rejected, why & next steps Return accepted Payment received & posted Refund issued Refund on hold, why & next steps Return under inquiry, why & next steps How: Information provided to transmitters and directly to filers tax software Improve CommunicationsComprehensive tax return status electronically

12. Electronic CorrespondenceReplace paper notices • What: State implements electronic system that allows taxpayers and their preparers to correspond with the agency • How: Replace paper notices sent via mail • e.g., notices for additional information, payment substantiation, information verification, and audit • Include ability to attach electronic “power of attorney” form to email message • Via email or other electronic messaging

13. Provide Account InformationElectronic Account Management • What: State electronically provides tax account information to taxpayers and preparers, from their Web site and through commercial software • How: State creates Web application allowing taxpayers to: • Review account status • Check on quarterly payments • Find tax rates

14. Benefits to Citizens • Easy to manage tax process! • Fast! • 2 minute tax return • Easy resolutions • More accurate - no data entry errors • Truly paperless!! Bottom Line Create a great end user experience! Taxpayers and tax preparers will want to do it!

15. Benefits to States • Reduces costs: • Increased accuracy of returns • Improved data validation • Increased usage of e-government services • LESS PAPER and use of manual services! • Increases efficiency: • More timely communication • More effective communication • Demonstrates e-government leadership • Results in (less un)happy taxpayers

16. Issues to Work on Together • Authentication • Support • Feature prioritization and timeframes • Implementation plan • Infrastructure/Long Term Vision • Data standards • Privacy • Interaction with other revenue agencies • Other?

17. Challenge and Recommendation • Work together quickly enough to create measurable “wins” and slowly enough to avoid issues that adversely affect taxpayers • 1 to 3 year plan • 5 year plan • 10 year vision