1. NASCO Annual Meeting Washington, DC October 2004
NASCONet E-Filing
NASCO Annual Meeting
Washington, DC
October 2004

2. The Problem Too much paper Inefficient processing
Difficult for charities that file in more than 1 state

3. Background: Federal E-Filing Used by Millions
60 million returns have been e-filed in 2004.
Of these, 43.2 million individual tax returns were e-filed by Tax Professionals.
“E-file brings you customers - and Tax Professionals who e-file report using an average of 10 minutes less per return!”
“Smart - IRS provides an official acknowledgement that your client's return was received. And, through integrated e-file and pay options, you can help your client e-file and pay at the same time!”
Fed-State individual income tax e-filing available in 37 states & DC.
6.7 million business returns were e-filed in 2003
Source:

4. Background: The Potential for Nonprofits
Whether organizations prepare their own or use CPAs to prepare their 990s, the potential for e-filing is high:
90% of organizations had access to the Internet in (We expect the percentage is even higher now.) (Urban Inst e-filing survey)
Nearly 3 out of 4 nonprofits use outside preparers (almost always CPAs) to prepare their 990s. With the 2 largest tax prep software vendors (CCH & Intuit) going online with their 990s by Jan. 2006, the potential for efiling is great.
73% of financial executives said they would be very likely or somewhat likely to electronically file their Form 990. (Urban Institute 2002 e-filing survey)

5. Building the Infrastructure for Nationwide E-Filing
GuideStar & NCCS
State Charity Offices
IRS
Software Developers

6. The Flow of Information
Charity or Tax Preparer
Using CCH, Intuit, NCCS Online tax prep. systems
IRS
2005 – Fed forms only; Jan – Fed-State Retrieval
State Charity Offices
XML is the common language for transmitting the information
NCCS
State forms 2005

7. NCCS & GuideStar Develop resources for software developers & SCOs
XML SuperSchema that combines the Unified Registration Statement and state-specific forms for both initial registration and renewal
Consistent with IRS XML schema
Business Rules for each state
NCCS: Implement Online State Systems
Integrated with Form990.org IRS e-filing system
Driven by NascoNet XML SuperSchema
States & other software developers
Use XML SuperSchema to develop new systems for charities and SCOs

8. SuperSchema Categories

9. State Charity Offices Review XML Schema for your state
Accept IRS & State returns passed through the IRS Fed-State Retrieval System
Accept State returns filed directly via NCCS intermediary, own websites, or other systems
Accept electronic payments
Accept electronic signatures (preferable) or vouchers

10. State Schema Review Report

12. The IRS 990-EZ & full 990 can be e-filed today
Fed-State Retrieval System
Pass through state return information in XML SuperSchema format
Jan live
Web services to automate uploading and downloading of files from the IRS
2005 or Jan. 2006

13. Software Developers
Add module for putting data into IRS and NASCONet XML formats
Get certified with the IRS
CCH – Jan – the largest 990 tax prep. developer
Intuit – Jan – the 2nd largest

14. The XML SuperSchema
XML provides a “shared language” for transmitting information that can be spoken by any operating system or database.
Windows, Linux, mainframe systems
Oracle, Informix, MS SQL Server, MS Access databases
The IRS developed the schema for the 990s
We are developing a complementary system for state filing that the IRS will use in its Fed-State Retrieval System

15. Timeline SuperSchema, Business Rules, etc.
“Alpha” version of for the Unified Registration Statement, CO & PA – complete
SuperSchema structure complete– Jan , URS, PA, CO, NY, CA, NH, & 2 more states
Remaining states – June 2005
Implementations
NCCS 990-EZ Online – e-file with the IRS now; Full 990 – finishing touches
Online E-Filing System available for PA & CO by March 2005
One state per month after that

16. The 990 Online
How the free online system “feels” to the nonprofit or tax preparer
Sample page (from page 6 of the 990) for collecting list of states where a nonprofit files.
System can be used for both e-filing or for printing completed forms.

21. NASCONet Online: How It Will Work
Currently, 98+% of charities register in only one state
Multi-state filers are asked only those questions that are in at least one of their states.
No duplicate questions
No unnecessary questions
Build Programs, not Paperwork!

22. NASCONet Online: How It Will Work (2)
Four ways for the multi-state filers to complete their forms:
Use the URS plus any additional state-specific questions
Use one state’s form as the primary form and add on non-duplicative questions from other states
Order the questions by category (professional fundraising; responsible persons; etc.
Complete forms for each state separately with answers populated from 990 & other previous forms.

23. The NCCS Desktop 990 Used in Pennsylvania and Colorado
Shows logic of system that integrates completion of the 990 with the URS and state-specific forms.
The Desktop990 will be phased out next year when the Online system is completed.

48. SCO Tasks Download state data from the IRS
Download data from the NCCS & other internal or external systems
Approve returns & transmit error messages
Add XML data to existing databases
View “pseudo-returns” with all fields or PDF versions

55. The IRS Interface for SCOs
The current system requires only a browser and is presented in the following slides.
The “web services” that the IRS will unveil in either 2005 or Jan will fully automate the process