{"id":10864,"date":"2024-05-06T22:01:39","date_gmt":"2024-05-06T19:01:39","guid":{"rendered":"https:\/\/ch.jfdi.cc\/?p=10864"},"modified":"2024-05-06T22:01:39","modified_gmt":"2024-05-06T19:01:39","slug":"irs-modernization-efforts-pose-challenges-as-enterprises-embrace-efiling","status":"publish","type":"post","link":"https:\/\/ch.jfdi.cc\/?p=10864","title":{"rendered":"IRS Modernization Efforts Pose Challenges as Enterprises Embrace eFiling \u00a0"},"content":{"rendered":"

Digital transformation is becoming as inevitable as the reality of paying taxes. And as many companies discovered during the recent tax season, even the IRS is going digital.
\nAs Wendy Walker, solution principal at Sovos, told PYMNTS, the Internal Revenue Service\u2019s ongoing digitization efforts pose challenges \u2014 and benefits \u2014 for enterprises switching from paper-based filing and processes.
\n\u201cLike any large business, the IRS has a vast portfolio of operating systems,\u201d Walker said. The agency relies on more than 40 mainframe systems, over 900 mid-range systems and close to 3000 vendor-supplied applications.
\nSome of those legacy applications and systems, she observed, are decades old \u2014 stretching as far back as the 1960s. Some of them still operate with \u201cgreen screen\u201d terminals.
\nThe antiquated operations mean that there\u2019s still a significant amount of time and resources spent entering data manually, and there\u2019s still a huge amount of paper in the mix.
\nAs the National Taxpayer Advocate Erin Collins said to Congress in 2022, and as recounted by Walker: Paper is kryptonite to the IRS \u2014 and it\u2019s buried in it.
\nIn addition to millions of income tax returns and employment tax returns, the IRS receives over 5 billion information returns annually, in the form of 1099s and W-2s. While most of them are filed electronically, there are still tens of millions of information returns filed via paper submissions.<\/p>\n

Striving Toward Modernization <\/strong><\/h2>\n

Little wonder, then, that beginning in 2019, the \u201csystem modernization journey\u201d \u2014 as Walker termed it \u2014 took root with the Taxpayer First Act (TFA). Congress mandated that the IRS would have to \u201creimagine\u201d the taxpayer experience \u2014 with 45 provisions that restructured the IRS and charted a path toward improving all manner of taxpayer interactions, including updating systems and \u00a0processes.
\nTo modernize the intake of 5 billion information returns, the TFA mandated that the IRS build a new 1099 reporting system and with help from annual appropriations.
\nLast year, the IRS debuted the Information Return Intake System (IRIS), an online 1099 filing system that allows filers to manually create and electronically file 1099 returns. However, the system is not yet ready to take in billions of information returns electronically. Businesses with hundreds to millions of returns to file need a more streamlined method.
\nWith help from Inflation Reduction Act funding, the IRS has been working to build application programming interface (API) connectivity since last year. The benefits of modernizing this transfer of data include reduced errors and faster processing times.
\n\u201cBeing able to click a button within an application and have it send that information directly is going to take a lot [of inefficiencies] out of that filing process,\u201d Walker said. In addition, the IRIS platform alerts filers in real time whether critical information is missing or invalid from the returns, including incorrect taxpayer identification numbers.
\nFor corporations (especially the firms that make up Sovos\u2019 client base), and for financial services firms in particular, the IRS\u2019 efforts may have a ripple effect.
\n\u201cWith respect to the IRIS system,\u201d she said, \u201cit\u2019s a huge shift for the industry.\u201d
\nEnterprise accounting systems like SAP and Oracle and core payment and financial services platforms like Fiserv and FIS all have built-in programming for generating the current IRS 1099 file format. States require information return reporting, and most rely on the legacy FIRE (that\u2019s \u201cfiling information returns electronically\u201d) system, a network used for processing filing forms.
\n\u201cOrganizations need to think about how the IRS is moving all of us over to IRIS and away from the legacy systems,\u201d including the already-in-place FIRE, said Walker, because IRIS requires different filing formats and processes.
\nShe advised that companies should consider implementing a project team to help manage those operations and technology changes. The transition may be especially challenging if the IRS decides that it will not continue to support some of the information return types on FIRE, forcing a filer to file return information in both IRIS and FIRE to comply with annual filing requirements.
\nIn the months ahead, she said, paperless initiatives will continue to be a top priority at the IRS, and there will likely be more legislation from Congress mandating more eFiling initiatives and technological\u00a0 innovations.
\n\u201cYou have to think from an organizational perspective about how you\u2019re going to change over those systems and processes and procedures, and what those impacts are to everybody in between \u2026 and be prepared to respond on your timeline as an organization and not hopefully on the IRS\u2019,\u201d she said.<\/p>\n

See More In: <\/span>1099, B2B, Business Taxes, digital transformation, eFiling, Featured News, Fire, Internal Revenue Services, IRIS, IRS, News, PYMNTS News, Sovos, tax filing, taxes, w-2, Wendy Walker<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The IRS is undergoing digital transformation efforts to modernize its systems and processes, including the development of the Information Return Intake System (IRIS) for online 1099 filing. This modernization aims to reduce errors, improve processing times, and shift away from legacy systems like FIRE. The transition to IRIS may require companies to adapt their operations and technology to comply with new filing formats and processes.<\/p>\n","protected":false},"author":6,"featured_media":10865,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[6557,186,7768,2134,3348,33,6196,106,5099,2369,3818,59,27,5332,121,118,304,2294,3398,4310,1991,67,7096,5236,2685,3747,3331,1012,6132,4753,6790,1901,5612,4441,1806,1358,1065,6767,5799,1183,1682,618,3125,7045,380],"class_list":["post-10864","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-other","tag-application","tag-business","tag-business-taxes","tag-challenges","tag-change","tag-companies","tag-congress","tag-connectivity","tag-corporations","tag-data","tag-development","tag-digital-transformation","tag-employment","tag-errors","tag-featured","tag-fire","tag-funding","tag-income","tag-income-tax","tag-income-tax-returns","tag-industry","tag-inflation","tag-inflation-reduction-act","tag-irs","tag-legislation","tag-missing","tag-news","tag-numbers","tag-platforms","tag-project","tag-respect","tag-restructured","tag-revenue","tag-service","tag-services","tag-support","tag-tax","tag-tax-filing","tag-tax-returns","tag-taxes","tag-technology","tag-top","tag-transformation","tag-transition","tag-us"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\nIRS 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