'Revolutionizing How Taxpayers Transact and Communicate wit

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Form 1040 Electronic Signature Initiatives
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THE RESULTS OF THE PY 2000 ON-LINE ECN PILOT
CONTINUED TO SHOW ACCEPTANCE OF ELECTRONIC
SIGNATURES

• Volumes as of April 20, 2000 were 1,394,715
• Software development companies participated by
  changing
• their tax preparation software
• We continued to be challenged by factors outside
  of the pilots
• control (e.g., attachments precluding ECN use,
  cost of filing)
• A survey is scheduled for May to evaluate the
  results formally

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THE PY 2000 PRACTITIONER PIN PILOT WAS
EXPANDED AND A GREAT SUCCESS

• Volumes as of April 20, 2000 were 5,379,440
• Ten industry partners worked with IRS on the
  pilot
• Taxpayer presence in the office to personally
  enter the PIN and
• preparers mailing in worksheets continued as
  challenges to overcome
• A survey was distributed in March to evaluate the
  results of the pilot

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• PLANS FOR PY 2001 WERE INFLUENCED BY THE
• COMMISSIONERS GUIDANCE REGARDING THE PAPER JURAT
• The paper jurat has been identified as a
  significant obstacle
• Form 8453 is also a significant contributor to
  the cost of processing
• electronic submissions for IRS
• The paper jurat carries the return signature
• Jurat statement
• Disclosure consent
• Authorization for direct debit/deposit of funds
• Authorization to provide debt indicator
• The jurat also acts as the transmittal vehicle
  for Form 1040 attachments

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NINE OPTIONS WERE IDENTIFIED AND EVALUATED
AGAINST A SET OF CRITERIA THAT ASSESSED IMPACT ON
IRS AND TAXPAYERS

• IRS
• Implementation Risk
• Litigation Risk
• Infrastructure Impact
• Cost Impact
• Taxpayer
• Inconvenience
• e-Services Support
• Cost Impact

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ANALYSIS INDICATED THE IMPLEMENTATION THAT WILL
BEST SERVE THE TAXPAYER AND IRS

• Short- to Mid-Term
• Self-selected PIN with Shared Secret Validation
• Long-Term
• Digital Signature

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ALMOST 100 OF ALL FORM 1040 FILERS WOULD BE
ENABLED WITH AN ELECTRONIC SIGNATURE

• All taxpayers are enabled except filers of
  foreign returns and first time filers
  under 16 years of age
• The PIN is usable on-line or at a preparers
  office
• The taxpayer will self-select a PIN and share
  information from previous years return (AGI,
  Total Tax)
• Regular e-file processing will occur except for
  up-front validation and a Form 8453 indicator
  being set
• Tax booklets and possibly a postcard mailing will
  provide taxpayers with information

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EVEN WITH THE ACCEPTANCE OF A PIN OR DIGITAL
SIGNATURE, SOME ATTACHMENTS STILL REQUIRE A
PAPER JURAT

• Currently allowed as part of an e-filed return
• 2120 Multiple Support Declaration
• 8283 Sch B Non-Cash Charitable Contributions,
  Declaration of Appraisal Summary
• 8332 Release of Claim to Exemptions for Children
  of Divorced Taxpayers
• W-2, W-2G, 1099R Forms to support withholding
  (waiver in effect for PY 1999 request for
  permanent waiver pending)

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Proposed future implementation

• 56 Notice Concerning Fiduciary Relationship
• 970 Application to Use LIFO Inventory Method
• 982 Reduction of Tax Attributes Due to
  Discharge of Indebtedness
• (Also section 1082 basis adjustment)
• 1310 Statement of Person Claiming Refund Due to a
  Deceased
• Taxpayer
• 2439 Notice to Shareholder of Undistributed
  Long-Term Capital Gains
• 3115 Application for Change in Accounting Method
• 3468 Investment Credit (Attached to 3800 or
  attached separately)
• 3520 Annual Return to Report Transactions with
  Foreign Trusts

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Proposed future implementation (cont.)

• 8609 Low Income Housing Credit Allocation
  Certificate
• 8693 Low Income Housing Credit Disposition Bond
• 8847 Sch A Receipt for Contributions to Selected
  Community Dev. Corps (Attached to 3800 or
  attached separately)
• T (Timber) Forest Industries Schedule
• W2-C Statement of Corrected Income and Tax
  Amounts

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SEVERAL OPTIONS TO ADDRESS THESE ATTACHMENTS
HAVE BEEN IDENTIFIED...

• Waive submission
• Continue to accept as paper attachments to jurat
• Enable attachments electronically
• Investigate other technologies (e.g., fax,
  scanning)
• Leverage existing information from federal/state
  agencies

A TASK FORCE LED BY THE DEPUTY CHIEF OPERATIONS
OFFICER MET APRIL 6 TO BEGIN INVESTIGATING THESE
OPTIONS --- RECOMMENDATIONS DUE SOON
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