December 4, 2007

TIGERS Meeting

Internal Revenue Service

2

MeF Processing Year 2007 StatisticsAccepted returns as of November 25, 2007

Accepted Returns

Projected Returns % Projection

1120 232,376 237,100 98.0%

1120S 646,104 612,500 105.56%

7004 831,816 843,900 98.6%

1065/B 426, 774 250,000 170.7%

990/990EZ/PF 35,254 33,500 105.2%

8868 30,344 18,100 167.2%

2290 1,388 9,900 14.0%

720 0 200 0%

Total MeF volume – 2,204,056 Total MeF volume – 2,204,056 228%228% of the total volume this day in of the total volume this day in 20062006

3

MeF Comparison of November 25, 2006 to November 25, 2007

2006 Accepted Returns

2007 Accepted Returns

% Increase of 2006 volume

1120 144,946 232,376 +160%

1120S 400,794 646,104 +161%

7004 392,134 831,8166 +212%

990/990EZ/PF 14,379 35,254 +245%

8868 13,307 30,344 +228%

1065/B* N/A 426,774 N/A

2290* N/A 1,388 N/A

720* N/A 0 N/A

* First year on MeF – no data for 2006* First year on MeF – no data for 2006

4

MeF Volume Breakdown by Form Type

2290 0%

1065 30%

1120 18%

1120S52%

1120 (216,270) 1120S(623,054)

1065 (366,094) 2290 (903)

Source: MeF Executive Report

5

Paper vs. e-file for Form 1120S

Paper vs. e-file for Form 1120

Paper vs. e-file for Form 1065

Source: Electronic Tax Administration Research and Analysis System Database & MeF Executive Report

MeF (e-file) vs. Paper

Paper 84%

Mef 16%

Mef (623,054) Paper (3,286,676)

Mef 10%

Paper 90%

Mef (216,270) Paper (1,989,273)

Paper vs. e-file for Form 2290

Mef 0%

Paper 100%

Mef (903) Paper (736,599)

Legacy e-file 1%

Paper 87%

Mef 12%

Mef (366,094)Legacy e-file (36,682)Paper (2,531,821)

6

MeF Status – Mandated Returns as of November 25, 2007

There have been 45,297 returns with assets of $10 million or more filed this year.

• 24,958 returns had assets greater than $10 million but less than $50 million.

• 20,339 returns had assets of $50 million or more

• Breakdown of $50 million or more – 6,555 returns had assets over $50 million and less than $100 million

– 9,020 returns had assets between $100 million and less than $500 million

– 1,874 returns had assets between $500 million and less than$1 billion

– 2,890 returns had assets $1 billion and over

7

MeF Status – Amended Returns as of November 25, 2007

MeF accepted 2,105 amended/superseded returns

– 5 were TY2005 returns

– Many amended returns are claiming TETR credits

– 607 Form 1065 amended returns

– 402 Form 1120 amended/superseded returns

– 1096 Form 1120S amended/superseded returns

* 274 Superseded 1120/1120S

8

Fed/State Returns as of November 25, 2007 • The IRS has made available State submissions for 10 states - Total Volume 52,833

– Note: Three states are live but have not received any submissions to date

– Corporate – 23,243 Fed/State 28,396 State Only

– Partnership - 693 Fed/State 1,501 State Only

Total State Returns Made Available

Fed/State Made Available

State Standalone Made Available

Grand Total 52833 22,936 29,897

StateTotal State Returns Made Available

Fed/State Made Available

State Standalone Made Available

GAST 5448 2,572 2,876

KSST 4895 2,283 2,612

MDST 6913 2,911 4,002

MIST 1724 357 1,367

NYST 19546 5,577 13,969

PAST 352 5 347

SCST 2 1 1

WIST 13953 9,230 4,723

Total: 52833 22,936 29,897

9

ETEC (Form 2290) Statistics – As of November 25, 2007

• Total Returns Filed – 2,494

– Total Accepted – 1,388

– Total Rejected – 1,106

– Mandated Returns Accepted – 240

– Volume Summary for Mandated Returns - $22,665,385.00

• First return filed expected with 4th Quarter filing

10

Miscellaneous

• Number of Returns Filed within 5 days of September 17 filing deadline

– 9/12 – 9/17

– 9/17 - 9/22

• Number of Companies that filed a Mixed Return

– 386 mixed returns filed through 11/26/2007

• Number of Companies that e-Filed international forms:

– xxx•  

– .

1120 40,191

1120S 74,568

1120 20,843

1120S 43,368

11

1120 Waiver Statistics – 2007 Requests

• Total Waivers 182

– Outstanding 8

– Granted 120• Final Returns – largest percentage

– Denied 47

– Not Required 7

12

1065 Waiver Statistics – 2007 Requests

• Total Waivers 11

– Granted 5

– Denied 6

December 4, 2007

MeF 2007 Software Reports

An analysis of the software packages and their accuracy based on business rule numbers.

14

General Statistics – As of 11/15/07

• Of 946,433 returns transmitted, 876,477 were accepted for an overall acceptance rate of 92.6%.

• There were 50 packages rated.

• NOTE: The Report Card Information has not been decimated to each software developer. It is currently being packaged in order to be emailed by mid-December.

15

General Statistics – As of 11/15/07

• Top 5 Business Rule Numbers (ERCs)

1. R0000-905 –17,8222. R0000-901 – 16,9133. R0000-917 – 7,0484. R0000-900 – 6,1325. X0000-005 – 5,234

16

General Statistics – As of 11/15/07

• Software packages Transmitting: 50

• Average Number Transmitted ~ 18,929

• Software packages > 100,000 returns : 4

• Software packages < 5,000 returns : 36

• Fewest number Transmitted by a package: 1 Returns

17

General Statistics – As of 11/15/07

• Average Number Accepted ~ 17,530

• Software packages > 100,000 returns : 4

• Software packages < 5,000 returns : 38

• Fewest number Accepted by a package : 0 Returns

18

General Statistics – As of 11/15/07

• Average Number Rejected ~ 1,399

• Software packages > 10k returns : 2

• Software packages < 1,000 returns : 40

• Fewest number Rejected by a package : 0 Returns

19

General Statistics – As of 11/15/07

• Average Number ERCs~ 1,656

• Software packages > 10k ERCs : 4

• Software packages < 1,000 ERCs : 36

• Fewest number of ERCs by a Package : 0 ERCs

20

General Statistics – As of 11/15/07

•Average Number ERC/reject ~ 1.66

•Highest Rate: 4.60

•Lowest Rate: 0.00

21

General Statistics – As of 11/15/07

• Average Acceptance Rate ~ 64.49%

• Highest Rate: 100%

• Lowest Rate: 0%

• Packages Above 89%: 10

• Size is significant. The top 14 packages in Acceptance rate also file 88% of all returns.

22

Changes Implemented

• Strong Authentication and Automated Enrollment

– User guide for AE distributed

– Document on Strong Authentication needs to be requested from Lee Lawrence or Carol McLaughlin

• Strong Authentication

– Digital certificate - Automated Enrollment

– Separate sys id Eventually convert over

– Binary Signature Login, Single Step

– SAML Other services in same session

– No binary signature and SAML in same service

23

Changes Implemented (continued)

• Strong Authentication Mandatory Reminder

– ATS November 2008

– Production January 2009

• Threat Mitigation

– IFA Users attachments content type application/octet-stream

24

Changes for Processing Year 2008

• State Manifest – Included State Schema Version

• New State Services - GetSubmissionReconciliationList

– Request a list of state returns that MeF has not received a receipt or acknowledgement from the state

• IRS Submission Manifest – Added EIN, TaxPeriodBeginDate and TaxPeriodEndDate to manifest for TY2007.

• Acknowledgment Changes – AFFECTS ALL PROGRAMS – MUST USE NEW ACKNOWLEDGEMENT

– Added Document ID – FOR STATE = Place “NA” in the field – Previous guidance was “Not Applicable”

– Added IRS Received Date

– Added Alerts for 1120-F and 1120S

• For accepted returns with alerts – customer should not be trying to fix (Guidance will be published)

• For rejected returns with alerts – customer can fix and then re-transmit

25

Changes for Processing Year 2009

• Proposed Change

– Removing from Return Header - TaxPeriodBeginDate and TaxPeriodEndDate

– Investigating Manifest versioning

• State Changes Request???

– Requirements are due Dec 12 to our MITS counterparts