IRS RESPONSE TO RECOMMENDATION: The W&I e-File Services organization will continue to support the Digitalization Office and Information Technology as the lead stakeholders in the agency to determine the best way to move forward to expand IRS digitalization technology as outlined in the IRS Integrated Modernization Plan and required by the Taxpayer First Act. This includes developing an e-file plan for evaluating and prioritizing forms that taxpayers cannot currently e-file that is flexible to meet IRS priorities while continuing to respond to new legislative and other critical operational needs.

CORRECTIVE ACTION: The W&I e-File Services organization will continue to support the Digitalization Office and Information Technology as the lead stakeholders in the agency to determine the best way to move forward to expand IRS digitalization technology as outlined in the IRS Integrated Modernization Plan and required by the Taxpayer First Act. This includes developing an e-file plan for evaluating and prioritizing forms that taxpayers cannot currently e-file that is flexible to meet IRS priorities while continuing to respond to new legislative and other critical operational needs.

Update: W&I e-File Services will identify highest priority documents that cannot be submitted through MeF platform by late FY 2023 Q1.

Update: For the Modernized Electronic Filing platform (MeF), the IRS completed a solicitation of internal and external stakeholders to prioritize forms not yet available for electronic filing. Based on this feedback, form development discussions are in process for Filing Season 2024. Development is dependent on various functions completing the work. Currently, we do not have a development schedule. This is dependent on the outcome of current funding prioritization decisions.

TAS RESPONSE: Developing and publishing an e-file plan that includes all forms that taxpayers cannot currently e-file will demonstrate the IRS’s commitment to reducing e-filing barriers for all taxpayers. Expanding e-filing options will provide better service to taxpayers and will reduce the IRS’s paper processing workload.

Update: TAS is continuing to monitor this recommendation until there is a development schedule in place.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 6/30/2024

IRS RESPONSE TO RECOMMENDATION: The IRS will perform a study to determine the feasibility of allowing all forms, schedules, and attachments to be electronically filed using the current MeF infrastructure based upon agency priorities and available resources (e.g., allocated funding, project schedule, programming resources).

Update: The IRS has established EDCMO to determine the feasibility of allowing all forms, schedules, and attachments to be electronically filed using the current MeF infrastructure or other platform. This will be based upon agency priorities and available resources (e.g., legislation, allocated funding, product schedule and programming resources). EDCMO should assume ownership of this recommendation to conduct the feasibility study. CAS SP will collaborate with them as needed. Proposed next update 12/31/2023

Update: The IRS has established EDCMO to determine the feasibility of allowing all forms, schedules, and attachments to be electronically filed using the current MeF infrastructure or other platform. This will be based upon agency priorities and available resources (e.g., legislation, allocated funding, product schedule and programming resources). EDCMO should assume ownership of this recommendation to conduct the feasibility study. CAS SP will collaborate with them as needed. Proposed next update 6/30/2024.

CORRECTIVE ACTION: The IRS will perform a study to determine the feasibility of allowing all forms, schedules, and attachments to be electronically filed using the current MeF infrastructure based upon agency priorities and available resources (e.g., allocated funding, project schedule, programming resources).

TAS RESPONSE: It is encouraging that the IRS will study the feasibility of allowing all forms, schedules, and attachments to be electronically filed. Expanding e-filing options will provide better service to taxpayers and will reduce the IRS’s paper processing workload.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 6/30/2024

IRS RESPONSE TO RECOMMENDATION: The IRS is piloting the conversion of paper returns to a digital format in the Lockbox environment. The pilot is currently working through the technical and legal questions involved. The IRS is also exploring the expanded use of optical character recognition (OCR) for paper tax returns in a separate pilot project. As part of the IRS’s digitalization strategy, the IRS may consider these and other options for some forms, correspondence, and other paper submissions. Both barcoding and OCR technology have limitations and costs. For example, barcoding does not encode all information on complex returns, and OCR may misinterpret some information, requiring quality review and manual re-entry (as does the current manual transcription process).

CORRECTIVE ACTION: The IRS is piloting the conversion of paper returns to a digital format in the Lockbox environment. The pilot is currently working through the technical and legal questions involved. The IRS is also exploring the expanded use of optical character recognition (OCR) for paper tax returns in a separate pilot project. As part of the IRS’s digitalization strategy, the IRS may consider these and other options for some forms, correspondence, and other paper submissions. Both barcoding and OCR technology have limitations and costs. For example, barcoding does not encode all information on complex returns, and OCR may misinterpret some information, requiring quality review and manual re-entry (as does the current manual transcription process).

Update: The FS and the Legacy Branch is working with EDCMO to write requirements for the pilot program with two banks who are in the lockbox program. Currently the banks are submitting test cases in the Assurance Testing System (ATS) environment.

Update: The product launch for our Lockbox (LB) Project for Forms 940s kicked off 02/07/23 with both Financial Agents (FA). Through March 19, 2023, we have accepted over 270,000, 2022 Forms 940 through MeF from our LB FAs. We are scheduled to start Form 941 Qtr. 1 in LB FA in mid-May and addition Qtrs. as we move forward.

Scanning as-a-Service (SCaaS) – Schedule to start product launch with 3 vendors for Forms 941 Qtr. 4 the week of March 20th. When completed they will move to other Qtrs.

Submission Processing Modernization (SPM) Project – schedule to start product launch with 4 vendors for Forms 1040+10 Forms/Schedule the week of March 20th. When completed they will move to other Forms 1040+25 Forms/Schedule in mid-June.

TAS RESPONSE: It is encouraging that the IRS is exploring the expanded use of OCR for paper tax returns through a pilot project and is willing to consider expanded use of barcoding on paper returns. All technologies have associated limitations and costs, but OCR and barcoding can be valuable tools for improving the IRS’s paper processing systems.

Update: IRS stated they will be doing a test on the 2-D scanning soon (March/April 2023)..

Update: TAS is monitoring this recommendation in conjunction with 2022 1-1, 2021 5-1, 8-6, and 8-7.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 5/15/2025

IRS RESPONSE TO RECOMMENDATION: Not all temporary changes may be made permanent due to National Institute for Standards & Technology (NIST) requirements. However, the IRS continues its work towards identifying permanent signature solutions that allow for electronic submission of forms and digital transactions in a secure manner that meets NIST requirements. As we work toward permanent solutions, we are committed to maintaining as much flexibility as possible for electronic and digital signature requirements. We are taking specific actions in hopes of speeding up our e-Signature Program due to the increased need for virtual interactions during the pandemic.

CORRECTIVE ACTION: The IRS continues its work towards identifying permanent signature solutions that allow for electronic submission of forms and digital transactions in a secure manner that meets NIST requirements. As we work toward permanent solutions, we are committed to maintaining as much flexibility as possible for electronic and digital signature requirements. We are taking specific actions in hopes of speeding up our e-Signature Program due to the increased need for virtual interactions during the pandemic.

Update: The corrective action is substantially completed. Internal Revenue Manual 10.10.1, Identity Assurance, IRS Electronic Signature (e-Signature) Program, was updated to incorporate Interim Guidance memo NHQ-10-1121-0005, Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms, into this IRM. The IRM is currently going through Labor Relations and Technical Review. In addition, the decision to make this change was documented on a Risk Acceptance Form and Template (RAFT) and is currently going through review and clearance for Deputy Commissioner Services and Enforcement signature. PGLD recommends closing this action when the IRM is posted, and the RAFT signed.

Update: The Covid-related temporary changes to electronic or digital signature requirements will be in place until a permanent solution is deployed.

TAS RESPONSE: TAS understands the agreement in part and that the IRS is bound by NIST requirements. It is encouraging that the IRS is committed to maintaining as much flexibility as possible for electronic and digital signature requirements.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A