FOR IMMEDIATE RELEASE, Contact: (202) 225-7601
September 2, 1997
No. OV-7
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on Oversight of the Committee on Ways and Means, today announced that the Subcommittee will hold the second in a series of hearings to examine the June 25, 1997, report of the National Commission on Restructuring the Internal Revenue Service (IRS). The hearing, focusing on the Commission's recommendations to expand electronic filing of tax and information returns, will take place on Tuesday, September 9, 1997, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m.
Oral testimony at this hearing will be from invited witnesses only. Witnesses will include officials from the U.S. Department of the Treasury and the IRS, representatives from practitioner organizations, and stakeholders who play important roles in tax and information return filing. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee and for inclusion in the printed record of the hearing.
BACKGROUND:
The IRS presently receives approximately 205 million tax returns each year. The largest workload associated with processing these returns involves the nearly 120 million individual tax returns that are received during the tax filing season from January 1 to April 15. The IRS uses 10 service centers in different regions of the country to process income tax returns. During processing, tax data from each return is manually entered into IRS computers by seasonal employees hired temporarily during the filing season.
During the 1997 tax filing season, the IRS received approximately 20 million individual tax returns electronically. Of the 100 million individual returns that were submitted in paper format, approximately 70 million exist in electronic format prior to submission to the IRS. Tax practitioners prepare approximately 60 million returns per year, almost all of which are prepared using tax preparation software. Another 10 million returns are self-prepared by taxpayers using tax preparation software on personal computers. The majority of these electronically prepared returns are printed out and sent to the IRS in paper format, after which they are reconverted to digital form through the manual data capture process.
This digital-to-paper-to-digital conversion creates inefficiencies that add to the cost of processing paper returns. For example, the error rate for the manual data entry process is approximately 20 percent, half of which is attributable to the IRS, and half to errors in taxpayer data. Because electronically filed returns are usually prepared using computer software programs with built in accuracy checks, undergo pre-screening by the IRS, and experience no key punch errors, electronic returns have an error rate of less than one percent. In addition, the IRS paper returns processing function still uses outmoded equipment that experiences significant downtime and slower operator productivity. If the returns prepared in electronic format were transmitted directly to the IRS, these redundancies and inefficiencies could be avoided.
The Commission concluded that to develop a successful electronic filing program, the IRS must put into place a comprehensive plan to remove barriers, increase benefits, and broaden the appeal of electronic filing to all segments of the taxpayer and practitioner population. The Commission recommended that the IRS, Congress, and the Administration establish a goal that 80 percent of all tax returns should be filed electronically within 10 years, and that IRS's leadership should be held accountable for accomplishing that goal.
The Commission's recommendations are embodied in H.R. 2292, which was introduced on July 30th by Reps. Rob Portman (R-OH) and Ben Cardin (D-MD). The specific provisions in the bill relating to electronic filing include: (1) a mandate for the IRS, within 180 days, to implement a plan to eliminate barriers, provide incentives, and use competitive market forces to increase electronic filing over the next 10 years; (2) a mandate for the IRS, within 180 days, to develop procedures for the payment of incentives to qualified transmitters of electronic returns; (3) extension of the filing deadline to May 15th for taxpayers who file their returns electronically; and (4) amendments to the Internal Revenue Code to facilitate paperless electronic filing.
In announcing the hearing, Chairman Johnson stated: "A comprehensive strategy to encourage electronic filing of tax returns holds significant potential not only to make the IRS returns processing function more efficient, but also to greatly benefit taxpayers. Errors would be reduced, in turn, reducing the number of notices that are triggered by errors in the manual data entry process. In addition, taxpayers who file their returns electronically would receive confirmation from the IRS that their return was received."
FOCUS OF THE HEARING:
The Subcommittee will examine the Commission's recommendations for expanding electronic filing and is seeking comment on other actions which could be taken to help achieve the goal of receiving 80 percent of tax returns electronically within 10 years. It will also examine the plans that are currently being developed by the Treasury and IRS to expand electronic filing, including the draft Request for Proposals (RFP) on Electronic Tax Administration which will be issued by the IRS in mid-September. This RFP will solicit proposals from practitioner groups and other stakeholders regarding the establishment of strategic partnerships with the IRS to facilitate the expansion of electronic filing.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement for the printed record of the hearing should submit at least six (6) single-space legal-size copies of their statement, along with an IBM compatible 3.5-inch diskette in ASCII DOS Text or WordPerfect 5.1 format only, with their name, address, and hearing date noted on a label, by the close of business, Tuesday, September 23, 1997, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Oversight office, room 1136 Longworth House Office Building, at least one hour before the hearing begins.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages including attachments. At the same time written statements are submitted to the Committee, witnesses are now requested to submit their statements on an IBM compatible 3.5-inch diskette in ASCII DOS Text or WordPerfect 5.1 format. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record.
The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and the public during the course of a public hearing may be submitted in other forms.
The
Committee seeks to make its facilities accessible to persons with
disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event
(four business days notice is requested). Questions with regard to
special accommodation needs in general (including availability of
Committee materials in alternative formats) may be directed to the
Committee as noted above.