IRS e-file How Goes the Revolution?

1. IRS e-fileHow Goes the Revolution? 1999 Federation of Tax Administrators Technology Conference

2. Mandate from IRS Restructuring and Reform Act 1998 Existence of ETA Strategy for Growth document Guidance from Electronic Tax Administration Advisory Council (ETAAC) Existence of untapped market opportunities Support for the ETA Revolution is Well Established

3. ETA Volumes Continue to Rise (as of August 6, 1999) 1999 1998 Practitioner e-file 17.65 21.16 On-Line Filing 0.94 2.44 TeleFile 5.96 5.66 Total e-file (millions) 24.54 29.26 Federal/State e-file (no-add) 6.09 8.33 Million WWW Downloads 44.83 63.10 EFTPS payments in billions $ 849.38 $ 1,004.13

4. Only: 1 in 4 taxpayers electronically files 1 in 3 are tax preparer clients 45% are registered EROs 30% of tax preparers are active EROs Untapped Market Opportunities to Increase Electronic Filing Abound

5. Yet: 1998 - More than 45 Million U.S. households have personal computers 1998: More than 80 million individuals used some form of internet application to date By 2000 - 10-16 million will be banking on-line Credit and debit cards are pervasive Top 40,000 corporations regularly transact electronically Untapped Market Opportunities to Increase Electronic Filing Abound -Cont’d.

6. Continue with efforts to: Add new forms/schedules Enhance existing electronic filing and payment programs Focus, improve and expand marketing efforts Improve incentives and services for Authorized IRS e-file Providers ETA Modernization is underway Expand partnerships with private sector Strategies for Success Include Program Improvements and Incentives

7. Schedule J, Farm Income Averaging Form 8271, Investor Reporting of TaxShelter Registration Number Form 8582-CR, Passive Activity Gains Form 6781, Gains and Losses from Section 1256, Contracts and Straddles Form 8586, Low Income Housing Credit New Forms and Schedules Will Be Available in 2000

8. Uses worksheet built into practitioner software that is completed and printed to contain: - Pen & ink signature to certify figures on e- file return - One-time use PIN Taxpayer signs return using self-selected PIN ERO signs return using self-selected PIN ERO retains worksheet - No Form 8453 to mail IRS sends out e-file customer numbers to users of PC tax preparation software users Authentication Pilots are Replacing the Form 8453

9. Use of Credit Cards- Pay by Phone - Use Discover Card, MasterCard, or American Express - File and Pay - Discover Financial Services in Partnership with Intuit Use of Direct Debit - Available only to taxpayers filing electronically Paperless Payment Pilots Will Impact How Taxpayers Pay Balances Due

10. On-line e-file Customer Number (ECN) Pilot- 655,000 taxpayers took advantage of ECNs Practitioner PIN Pilot- Almost 500,000 returns e-filed using self-selected PINs Credit Card Pilot- Over 53,000 payments processed totaling over $183 million Direct Debit Pilot- Approximately 75,000 payments processed totaling $139 million Volumes for ETA Pilots Off to a Good Start

11. ETA’s marketing budget increased as follows: - 1998: $5 Million - 1999: $8 Million - 2000: $13 Million (proposed) ETA marketing supported by Madison Avenue advertising firm and private sector research firms - Individual and business marketing strategies for 2000 under development - Multi-year strategy (beyond 2000) under development ETA Marketing Continues to Mature

12. Emphasize ERO and “on-line” filing channels Target Upscale Technology Advanced and Pressured Tech Users Expand paid placement on Cable TV News Weekly National Publications Internet Banner Ads Build on existing major messages Improve consistency among placements Create Fed/State IRS e-file logo for states Promote “free” e-file offerings Previewof ETA MarketingCampaign for the 2000 Season

13. High quality IRS e-file participation may entitle partners to: Market research for your area Distribution Channel Management incentives - Recognizes differences amongst channels and rewards “good distributors” through incentives and service offerings Account Management services - National accounts - Field-based accounts - Customer Service Representatives focusing on your needs Future e-services Based on e-file History and Performance

14. Starting in 2001: Up-to-date authentication capabilities to support electronic filing, payments, and communications Secure infrastructure for “transactional” Internet business applications First transactional self-service applications for taxpayers on the Internet New business functionality to complement IRS’s legacy capabilities and to leverage new security infrastructure ETA Modernization Efforts of Today Will Pay Off Tomorrow

15. Electronic Tax Administration - Wave of future for you and the public Program enhancements, ETA modernization, and integrated marketing efforts continue Due to expanded services, active EROs will have competitive edge over paper filing practitioners Partnerships with the public and private sector are key to success Opportunities abound! Join the revolution! Let’s Review!

16. ETA Strategy for Growth DocumentIRS Digital Daily: www.irs.ustreas.gov/prod/elec_svs/eta-plan.html Practitioner PIN Pilot IRS Digital Daily:http://www.irs.ustreas.gov/prod/elec_svs/psigpilot.htmlIRS Procurement web site: http://208.197.188.3/opportun.htm Paperless Payment Pilot IRS Digital Daily: http://www.irs.ustreas.gov/prod/elec_svs/e-paymnt.html Visit the IRS Web Site For More Information on ETA Programs

17. IRS e-file Application Digital Daily: http://www.irs.ustreas.gov/prod/elec_svs/efile-app.html ETA Requests for AgreementsIRS Procurement web site: http://208.197.188.3/opportun.htm Authorized IRS e-file Provider DatabaseDigital Daily: www.irs.ustreas.gov/prod/elec_svs/ero/indiv.html Visit the IRS Web Site For More Information on ETA Programs - Cont’d.