[May 05, 2003]   IRS Modernized e-File Team Releases New XML Schemas for Corporate Income Tax.    A posting from Barr Joan (US IRS Modernized e-File Team) announces the release of new XML schemas governing the e-filing of income tax information for US corporations. The distribution includes some 750 new XML schema files used by tax preparation software developers and tax preparers in automated e-filing and validation of IRS forms data. The schemas cover TY2002 1120 forms, including the Production Release Version 1.0 (53 forms) and Candidate Release Version 2.0 (43 forms). IRS Form 1120 "is used to report the income, gains, losses, deductions and credits, and income tax liability of a corporation. All domestic corporations (including corporations in bankruptcy) must file whether or not they have taxable income. IRS Form 1120S is used to report income, deductions gains, losses, etc., of a domestic corporation that has elected to be an S corporation by filing Form 2553, Election by a Small Business Corporation, and whose election is in effect for the tax year and until terminated. The IRS is vigorously designing an electronic filing process for Forms 1120 and 1120S under the IRS e-file program. The 1120/1120S e-file program is scheduled to begin in January 2004. Upon completion, the 1120 program will have file and pay capability and returns will be processed on a transaction basis rather than in batch mode. Any business taxpayer who files Form 1120/1120S may e-file their return through an Authorized IRS e-file provider." In January 2003 the IRS began accepting XML-based electronic filing for the 94x series, including Form 940 (federal unemployment taxes) and Form 941 (employers' quarterly federal taxes).

[October 01, 2002] The IRS was one the early adopters of SGML in the 1980s. As of Fall 2002, several intitiatives are focused on the creation of XML schemas for e-filing.

[September 30, 2002]   US Internal Revenue Service Establishes Online XML Developers' Forum for Employment Tax E-file System.    The US Internal Revenue Service has set up an online "94x XML Developers' Forum" to provide information and technical guidance for software developers interested in developing software for the new Employment Tax e-file System in XML. The website provides links to the relevant XML Schemas, technical documents, news, and announcements. Supported tax forms include: Form 940 - Employer's Annual Federal Unemployment (FUTA) Tax Return (Forma 940-PR in Spanish), Form 941 - Employer's Quarterly Federal Tax Return (Form 941-PR in Spanish), Form 941-SS - Employer's Quarterly Federal Tax Return, Form 941c - Supporting Statement to Correct Information, and XML PIN Registration. An Employment Tax e-file System Implementation and User Guide and a Preliminary Guide to Creating 94x Return Transmission Files provide procedural guidelines and validation criteria for the Employment Tax e-file System. Section 5 of the User Guide ('Building XML Transmission Files') describes the procedure for creating a 94x return transmission file with XML structures for the SOAP Transmission Envelope, TransmissionHeader, PINRegistrationOriginHeader, PIN Registration Transmission Envelope, and a complete Transmission Envelope with the ReturnData and MIME parts. "The new Employment Tax e-file System has been designed to replace all previous electronic filing options for returns in the 940 and 941 families. Previous e-file formats will be maintained in order to allow for transition to the new XML based system." The IRS XML Development Teams also maintain two lists (XML Schema News and Information, XML Schema Discussion Group) for distributing communications, and encouraging open discussion on the overall XML development effort. An associated US Fed/State Employment Tax XML Forum provides guidance for software developers and Federal/State partners who are interested in developing a gateway and/or software to file both federal and state employment taxes along with payments. The state level XML schemas are designed to be used with the Federal 94x schemas. [Full context]

Development of XML schemas relevant to IRS electronic tax filing is also reported in the TIGERS section. MITRE is also a key player: the MITRE Corporation established its "newest Federally Funded Research and Development Center (FFRDC) in October 1998 with full-time employees. This new FFRDC, sponsored by the Internal Revenue Service (IRS), created an IRS/MITRE partnership focused on modernizing the nation's tax administration system and helping the IRS evolve to a state-of-the-art information technology (IT) enterprise. Within a year of establishing the IRS FFRDC, more than 150 MITRE staff members had assumed a wide range of roles and responsibilities for the IRS... MITRE's IRS FFRDC has become a trusted source of technical, organizational, strategic, and program management expertise for the IRS and for Customs." A Federally Funded Research and Development Center (FFRDC) is "a unique organization that assists the United States government with scientific research and analysis, systems development, and systems acquisition. FFRDCs bring together the expertise and outlook of government, industry, and academia to solve complex technical problems that cannot be solved by any one group alone."

Principal References

• Main web page. These five links reconstituted 2002-11-12:
• XML General 1120/1120S Schema Information
• 94x XML Developers' Forum
• 94x XML User Guides and Publications
• 94x XML Assurance Testing Scenarios
• Fed/State Employment Tax XML Forum
• IRS (US Internal Revenue Service) - SGML
• XML Markup Languages for Tax Information

Other References

• [May 05, 2003] "IRS Makes XML Schema Its Business." By Patricia Daukantas. In Government Computer News Volume 22, Number 9 (April 28, 2003), page 16. "Extensible Markup Language is making its way into the IRS through some of the most common tax forms filed by businesses. The tax agency's first XML product is the 94x XML, which refers to Form 940 (for federal unemployment taxes), Form 941 (for employers' quarterly federal taxes) and other forms in that series. The IRS released its final XML schema for those forms in January. To expand electronic filing, IRS officials realized that they had to go beyond the forms for individual taxpayers and develop e-filing for business customers, said Pat Clarke, a senior manager in the Development Services Division of the IRS' Electronic Tax Administration. 'We realized we were going to have to do something a bit different to accommodate some of the large business returns and to also give us the flexibility to add on the features that our customers were describing that they needed,' Clarke said. Switching to XML allows the IRS to adopt single data formats for many different types of business tax forms and schedules, said Chuck Piekarski, acting director of the Development Services Division. A larger goal for the Modernized E-File program is converting the 1120 (corporate income taxes) and 990 (tax-exempt organizations) families of tax forms to XML. January 2004 is the agency's target start date for releasing those XML schemas, which could eventually encompass almost 100 forms and schedules, Piekarski said. Because forms 940 and 941 are shorter than the 1120s, it was easier for the IRS to learn how to use XML with them, Clarke said. The Form 1120 filings of small corporations are only about 10 pages long, but for large companies the page count can run into the thousands. IRS programmers did the Form 94x development work in-house with help from the Tax Information Group for Electronic-Commerce Requirements Standardization, an interagency effort of the Federation of Tax Administrators... The use of XML brings many new opportunities for IRS and the tax preparation software industry, Piekarski said. Paid preparers handle 85 percent to 90 percent of business tax returns, and the companies that provide tax-prep applications will be able to update their programs simply by downloading new schemas from the agency's software developer partners page on www.irs.gov, Clarke said. Although the end users of such software may not notice XML directly, they may reap other benefits. For example, the IRS will be able to send back e-filing error messages in English instead of obscure numerical codes, Piekarski said... Modernized E-File will accept attachments in Adobe Portable Document Format, allowing future business taxpayers to scan and attach signed documents, such as real estate and art appraisals, to their e-filings... XML advocates within the IRS are even starting to look beyond U.S. borders. One IRS official last year helped launch an effort to devise an international XML standard for exchanging tax data. Gregory Carson, director of electronic tax administration modernization for the IRS' Wage and Investment Operating Division, organized the first meeting of the Tax XML Technical Committee last December at the XML 2002 conference in Baltimore. Carson served as the group's interim chairman until a Dutch tax official took over as permanent chairman..."

• [February 12, 2003] "IRS Regroups On Business Filing." By Diane Frank. In Federal Computer Week (February 12, 2003). From the Web-Enabling Government Conference. "The Internal Revenue Service's e-government initiative to provide online tax filing for businesses has become so much more complex than leaders expected that the agency is writing a new business case to support the initiative's needs. The Expanding Electronic Tax Products for Businesses initiative's biggest project is enabling companies to file their corporate income tax form 1120 electronically. While the initiative has progressed on many fronts, it will have to take a step back as it overlaps with and moves into the overall IRS business systems modernization effort, said Mary Ellen Corridore, project manager for the initiative... For the 1120s, the IRS has focused on using Extensible Markup Language to make it easier to file multiple returns and the many attachments that are often included in the returns. The tax-specific XML forms developed also will help to validate a lot of the information automatically, saving time for IRS employees, Corridore said. However, the IRS' electronic filing infrastructure cannot yet support these large returns, she said. Millions of individuals are already filing their income tax forms online, but the corporate forms can be up to 36,000 pages just for the form response, she said... The initiative also expects to launch another project within the next month. The Internet Employer Identification Number (EIN) project will allow companies to apply for and receive their EINs online, cutting down on time and work at both ends of the process, Corridore said. Right now, companies must apply by fax or mail. On average, the fax process will take four days, and mail will take 10. By moving the process to the Web, it will take only five seconds, she said..."

• IRS XML Schema and Stylesheet Discussion List (SchemaTalk). "Purpose: This list is for employees of the IRS and its Trading Partners to discuss the latest draft and final versions of IRS schemas and stylesheets distributed on the IrsXmlSchemas Newsletter. General discussion of other XML and e-file issues are also welcome. Membership is for IRS and Trading Partners only. Membership must be approved by the list admin. Unmoderated discussion, requires owner approval. The list owner is Xan Ostro (IRS). Subscribe at IrsXmlSchemaTalk-subscribe@topica.com.

• XML Schemas and StyleSheets Distribution List (XML S&S) "Purpose: This is a distribution list for IRS Trading Partners. The latest draft and final versions of IRS E-file tax return XML Schemas and style sheets are distributed for comment and use. Copies of final versions of schemas and stylesheets can also be found at the IRS Digital Daily Web Page. Membership must be approved by list admin and is for IRS abd trading partner employees only. Announcement list, requires owner approval. The list owner is Xan Ostro (IRS). Subscribe at IrsXmlSchemas-subscribe@topica.com.

• IRS Forms 1120/1120S, XML Schemas. Updated 2002-09

  • XML General 1120/1120S Schema Information.
  • "Final Draft. Version 1.0 - 09/30/02" ZIP archive with files dated 2002-09-25. [file listing, cache]
  • "Composing 1120 Return Transmission Files - An Overview"

• Forms 940/941

  • 94x XML Developers' Forum
  • 94x XML User Guides and Publications
  • 94x XML Assurance Testing Scenarios. Provides five optional scenarios that can be utilized for the 94x XML Assurance Testing.
  • 94x XML Schemas for January 2003. See the file listing. [cache 2002-09]
  • "A Preliminary Guide to Creating 94x Return Transmission Files." Updated June 14, 2002 or later. 20 pages. Uses XML Spy. "This document describes the procedure for creating a sample 94x return transmission file with dummy return data. [cache 2002-09]
  • 94x Sample. Extracted from the Guide.
  • Employment Tax e-file System Implementation and User Guide 2003. Forms 940, 940PR, 941, 941PR, 941SS, and Related Schedules. US Internal Revenue Service, Electronic Tax Administration. IRS Publication 3823 (Draft). 135 pages. Appendix B: Name Control Conventions; Appendix C: Street Abbreviations; Appendix D: Postal Service State Abbreviations and Zip Code Ranges; Appendix E: Sample Form 9041; Appendix F: Sample Form 8633; Appendix G: Glossary of Terms. [cache]
  • A Preliminary Guide to Creating PIN Registration Transmission Files. 11 pages.
  • A Preliminary Guide to Creating 94x Acknowledgement Files
  • Contact: 94x XML Development Team

• US Fed/State

  • US Fed/State Employment Tax XML Forum
  • Final Fed/State Employment Tax XML Schema. See the file listing. [cache 2002-09]
  • Employee information: Data Elements, XML Tag Name, Description [source .XLS]
  • Contact: Fed/State Employment Tax Support Team

• IRS-SGML Library on the Fedworld Information Network

• "XML Schema Activities at IRS." By Dr. Glenda Hayes (MITRE). November 7, 2001. For U.S. Department of Treasury Internal Revenue Service. The main example outlines the current approach taken in the creation of an IRS 1120 XML schema, where "one of the main objectives is to validate numeric values, as appropriate." Using XML schemas and XSL should reduce data errors, reduce costs in tbe validating of returns, and support easier transitions for changes in tax forms/schedules. The benefits of using XML for IRS 1120 [US Corporate Income Tax Return] are that "1120 represents approximately 85% of the data elements for IRS; it has significant overlap with Individual Tax (1040); the design effort will reconcile duplicate data elements (e.g., string length for address); it meets external stakeholder request; represents an IS/ETA joint effort; is a scoped pilot; exploits a large base of developers; involves coordination with external groups." Three experimental approaches to tax XML Schema development were identified: (1) using XBRL [loose control]; (2) a derived EDI based/TIGERS approach, with schema patterned after EDI transaction; (3) a 'direct' approach with tight control, patterned after the Microsoft 1040 strawman and the TIGERS Sales Tax Group. Draft schemas have been posted for public review. Next steps for IRS development are (1) community review of the 1120, 1120S, 941 schemas; the IRS has now set up a listserv for this purpose; (2) development of IRS Form 1041, 1065, and 990 XML schemas; (2) refinement of IRS XML schema, both types and general elements. [adapted from the report and TIGERS October 2001 minutes]

• See also: "Tax Information Group for ECommerce Requirements Standardization (TIGERS).