Internal Revenue Service Large and Mid-Size Business (LMSB) Division

1. Internal Revenue Service Large and Mid-Size Business (LMSB) Division Stephen Whiteaker Manager Pre-Filing & Technical Services (PFTS) July 19, 2005

2. What is PFTS? • Goal to resolve tax issues before return filing • Provide technical services to field employees within LMSB • One of PFTS’ major programs is E-commerce • PFTS has been charged with evaluating XBRL for potential use within our compliance function

3. Service’s Position on XBRL • No position taken at this time • Seriously assessing the prospect and feasibility of incorporating XBRL into the future • Committed to resolve tax issues sooner, address globalization, increase efficiency and provide electronic services

4. Current Electronic Services Examples: • Electronic Filing • Payment Options • e-Service Products

5. Electronic Filing In 1998 Congress set a goal of having 80% of all tax and informational returns be filed electronically by 2007 • On 4/28/2005 more than 50% of all returns were filed electronically • Service and stakeholders currently support the legacy e-file systems and the new modernized e-file (MeF) system

6. Modernized e-File (MeF) • MeF supports Extensible Mark-Up Language (XML) and allows for form standardization between the different IRS e-file programs • MeF provides for the e-filing of tax and information returns through the Electronic Management System (EMS) and the Internet via registered transmitters and electronic return originators • Eventually all e-file programs will use the MeF system to receive and process electronically filed returns

7. Corporate & Exempt Organizations E-filing Requirements • In January new e-file requirements were announced for large corporations and exempt organizations • Corporations with total assets of $50 million or more must e-file Forms 1120 and 1120S • Tax exempt organizations with total assets of $100 million or more must e-file their 2005 Form 990 • Applies to 2005 returns due in 2006 (applies to entities who file at least 250 returns in a CY) • In 2007 the asset amount is reduced to $10 million or more and private foundations and charitable trusts will be required to e-file regardless of assets.

8. Electronic Payment Options • ELECTRONIC PAYMENT OPTIONS – Fiscal Year 2004 • Over $1.6 trillion of taxes were paid through the Electronic Federal Tax Payment System (EFTPS) • Over $1.5 billion of taxes were paid through the electronic funds withdrawal (Direct Debit) option • Nearly $900 million of taxes were paid by credit card

9. e-Services Products • Web-based products that allow tax professionals and taxpayers as well as states and other partners, to do business with the IRS electronically 24 hours a day, 7 days a week • e-Services Registration • Preparer Tax Identification Number (PTIN) • IRS e-file Application • Taxpayer Identification Number (TIN) Matching, both Interactive TIN Matching and Bulk TIN Matching

10. e-Services Products Cont. • Additional incentive products are available for tax professionals who e-file five or more accepted tax returns in a calendar year • Disclosure Authorization (DA) • Electronic Account Resolution (EAR) • Transcript Delivery System (TDS)

11. Service’s Thoughts on XBRL • Assessing the prospect and feasibility of incorporating XBRL as follows: • Working with the International community as it relates to the XBRL-GL • Addressing global taxation issues through standardization of data reporting • XBRL as it relates to the Tax Audit File • Potential e-filing opportunities

12. Service’s Thoughts on XBRL Cont. • Remote auditing • Real time auditing • Service supports activity which creates quicker and more efficient use and access to information • Reviewing issues related to integrating XBRL into the IRS, e.g. costs, technology, internal and external impact, etc.

13. The IRS and XBRL Questions?