Modernized eFile FedState Development

1
Modernized eFileFed/State Development

• Jerry Coble Terry Garber
  Helen Pelersi
• NC DOR SC DOR
  NYS Dept of Taxation
• Co-Chair, TAG Co-Chair, TIGERS
  and Finance

2
Quick History

• IRS approached the newly formed TAG in May 2003
  to convene a deployment team of states for
  Fed/State 1120
• Business rules needed November 2003
• Target date for implementation January 2005
• TIGERS chosen as forum for technical work
• Actual live implementation January 2006
• Fed/State 1065 live January 2007

3
TAG

• Representatives from six states and IRS business
  units State and IRS co-chairs
• States serve two years on rotating basis
• Forum to promote Fed/State communication on
  priorities and strategies in tactical (3-5 year)
  timeframe
• Facilitate Fed/State electronic initiatives
• Not limited to efile

4
TAG Role in MeF

• Solicits and tracks state participation in
  Modernized Fed/State eFile
• Serves as advocate for states with IRS
• Monitors program progress
• Provides general oversight of TIGERS activities
• Works to resolve executive level issues escalated
  by TIGERS, IRS, or member states

5
TAG to the Rescue

• June 2004 urgent letter to IRS Commissioner
  when lack of funding threatened to defer
  Fed/State 1120
• June 2005 urgent letter to IRS to express
  concerns with proposed security solution
• February 2006 urgent letter to IRS Commissioner
  when lack of funding threatened to defer
  Fed/State 1040

6
TIGERS

• Joint initiative of FTA and ANSI ASC X12
• Development and maintenance of data interchange
  standards for tax and revenue
• Began with EDI format XML since 2000
• State and industry co-chairs
• Current programs include Fed/State 1120, 1065,
  and 1040, FSET, Motor Fuel, Streamlined and
  Standard Sales Tax.

7
TIGERS Role in MeF

• Develops and maintains business rules for
  Fed/State data validation
• Develops and maintains standards for XML
  formatting of state return data
• Works with IRS to develop and maintain
  packaging of federal and state submissions
• Works with IRS on web services development,
  including specifications for strong
  authentication

8
Fed/State 1040

• Business Rules published August 2006, based on
  Fed/State 1120 business rules and legacy 1040
  efile
• Assumption that most of the web services and
  packaging work will be based on Fed/State 1120
• Much dialog on transition plan
• Readiness of states and industry
• Minimize need to support parallel systems

9
Fed/State 1040

• Began work on state schemas under Category
  model piloted by Fed/State 1120
• Issues Master Schema not responsive to changes,
  and did not leverage existing code base complex
  mapping required
• New direction state forms based schemas within
  standard structure, with standard header,
  financial data, and binary attachment
• Standards to be finalized in December

10
TIGERS Ongoing

• Work still needed on version control and
  packaging of schema releases
• Refine standards for state submission, web
  services, and Fed/State packaging
• Determine any additional business rules
• Assist state and industry participants by working
  through examples
• Monitor program operations

11

• Fed/State 1120 Program

12
Background

• Day 1 participants in the FTA Tactical Advisory
  Group on 1120 (6/30/03)
• NYS Organizations Participating
• -Processing -Revenue Analysis (OTPA)
• -Audit -Technical Services
• Extensive Tigers participation
• NYS Project Kick-off (January 2006)
• NYS Go Live Date (January 2007)

13
Program Scope

• TY 2006 returns for Article 9A returns (general
  business), excluding Combined Filers
• ACH debit payment submitted as part of return
  filing this is our only payment option
• Support 14 returns initially proposed to support
  all forms but was scaled back due to vendor
  feedback
• Intake format is XML which is converted to
  proprietary format consistent with format for
  paper returns
• Retrieve frequently, but acknowledge once a day
• Batch mode processing (NYS backend)

14
Activity To Date

• Returns Processing
• 19,700 returns processed
• March 15, 2007 largest day with 2508 returns
• Participating Software Vendors/Packages
• Intuit (professional package)
• LaCerte
• Taxworks
• Creative Solution/Thompson

15
Global Issues Encountered

• Schema
• Master Schema vs. State Schema
• Consistency with Master Schema for State Schema
  changes
• Category Based Schema vs. Forms Based Schema
• Reconciliation between IRS Receipt /State Receipt
• No tool to verify State returns successfully
  receipted by IRS
• No tool to view/track state returns rejected
• Timeouts during retrieval from IRS
• Fluctuated between 10 - 50
• Marked as retrieved but never received when
  timeout happens (reconciliation issue)
• Set maximum at 100 but not reliably able to
  achieve it

16
NYS Processing Issues

• Our acknowledgement did not include an ACH Debit
  indicator
• Current feedback indicates users want it
• Extra step to carry ACH debit information from
  Federal Return
• to NYS return confused taxpayers (e-file
  software issue)
• Some taxpayers thought the bank account
  information they entered was automatically
  carried to both the Federal and State return
• Lack of systematic ability to track original
  submission date
• Rejected by IRS and/or NYS
• Original electronic postmark not retained on
  resubmission
• Challenge to provide an easy solution for users
  to view data
• Workplace Forms (xml based mapping/display tool)
• IRS style sheets
• PDF attachments
• Some acknowledgements delayed

17
Changes Planned

• Changes for TY 2007
• NYS Acknowledgement will include the ACH debit
  indicator
• Two new forms
• DTF 686 Tax Shelter Reportable Transactions
• -Signature document will be updated
• CT5.1 Request for Additional Time to File
• Reports to monitor returns filed/payment
  processed
• Changes TBD
• Combined Filers/more forms
• Transactional based processing
• Forms based Schema for Corporation Tax

18
Questions???

• Jerry Coble, TAG Chair, NC DOR
• Jerry.Coble_at_dornc.com
• Terry Garber, TIGERS Chair, SC DOR
  GarberT_at_sctax.org
• Helen Pelersi, NYS Taxation Finance
• Helen_Pelersi_at_tax.state.ny.us