Tax & Accounting Blog

IRS Electronic Tax Administration Advisory Committee Report – 2012

1099, ONESOURCE, Tax Information Reporting, TIN Compliance, Trust Tax October 15, 2012

Early this summer, the Electronic Tax Administration Advisory Committee (ETAAC) presented its 2012 Annual Report to Congress. The report discusses prior year recommendations and milestones before stressing significant inefficiencies caused by late legislation (often retroactive to the beginning of the year). There is not only a negative impact on tax compliance and e-filing administration, but also a negative impact on implementing the actual intent of the legislation itself.

Starting on page 14 of the ETACC report, five key groups of recommendations on issues in electronic tax administration are listed and discussed in detail. Those recommendations are briefly summarized below. Note that the second key recommendation is particularly relevant to tax information reporting:

  1. Reinforcing standards for security, privacy, and fraud prevention
  2. Moving forward on e-file of employment tax and information tax returns
    • More focus needed on e-filing of Forms 940 and 94. This is currently the largest group of returns not being e-filed.
    • Expand access to the IRS TIN Matching Program and eliminate barriers to registration. Authorize TIN Matching for all tax information reporting – not limited only to forms that require backup withholding. Allow for documented evidence of TIN Matching use for “Reasonable Cause” in seeking abatement of penalties. 
    • Increase penalties on manually filed information returns.
  3. Creating Internet tools for taxpayers and tax professionals
  4. Leveraging tax delivery service channels and
  5. Funding Modernized e-File and Customer Account Data Engine to completion

ETAAC submits an annual progress report to Congress each June.