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

Large and Mid-Size Business (LMSB) Division2 What is PFTS? What is PFTS? n Goal to resolve tax issues before return filing n Provide technical services to field employees within LMSB n One of PFTS’ major programs is E-commerce n PFTS has been charged with evaluating XBRL for potential use within our compliance function

Large and Mid-Size Business (LMSB) Division3 Service’s Position on XBRL n No position taken at this time n Seriously assessing the prospect and feasibility of incorporating XBRL into the future n Committed to resolve tax issues sooner, address globalization, increase efficiency and provide electronic services

Large and Mid-Size Business (LMSB) Division4 Current Electronic Services Examples: n Electronic Filing n Payment Options n e-Service Products

Large and Mid-Size Business (LMSB) Division5 Electronic Filing Electronic Filing –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 In 1998 Congress set a goal of having 80% of all tax and informational returns be filed electronically by 2007

Large and Mid-Size Business (LMSB) Division6 Modernized e-File (MeF) n MeF supports Extensible Mark-Up Language (XML) and allows for form standardization between the different IRS e-file programs n 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 n Eventually all e-file programs will use the MeF system to receive and process electronically filed returns

Large and Mid-Size Business (LMSB) Division7 Corporate & Exempt Organizations E-filing Requirements Corporate & Exempt Organizations E-filing Requirements n 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.

Large and Mid-Size Business (LMSB) Division8 Electronic Payment Options n 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

Large and Mid-Size Business (LMSB) Division9 e-Services Products n 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

Large and Mid-Size Business (LMSB) Division10 e-Services Products Cont. n 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)

Large and Mid-Size Business (LMSB) Division11 Service’s Thoughts on XBRL Service’s Thoughts on XBRL n 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

Large and Mid-Size Business (LMSB) Division12 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.

Large and Mid-Size Business (LMSB) Division13 The IRS and XBRL The IRS and XBRL Questions?