As technology changes, the IRS is trying to keep up by developing a newer form of electronic filing for taxes. In the long run, this should be an easier format, but for now, you need to be aware of some important changes that have been made for tax requirements..
First off, this is not a brand new system. It has been in the making for quite some time. In conjunction with tax professionals and software vendors, the IRS spent three years creating the modernized e-file (MeF) system.
The biggest element of MeF is the fact that it uses Extensible Markup Language (XML). XML is an industry standard when identifying, storing, and transmitting data.
The MeF has three main benefits including More Explicit Error Conditions, Faster acknowledgements and Integrated Payment. The combination of the three offers better explanations of errors, quicker transmission of data, and a more efficient payment system.
The XML format for MeF has tremendous benefits. They can be complex for some that are not completely computer savvy, but there is a step by step process of how the information is transmitted from you computer to the IRS for processing of a tax return.
1. Every IRS form is given an XML name tag.
2. All supporting data is defined and given an XML name tag.
3. The name tags are used to create XML schemas.
4. The return is validated by Business Rules that the IRS has made.
5. IRS supplies the XML schemas and Business Rules to software vendors.
6. Software vendors use the XML schemas and Business Rules to create the electronic portion of their professional tax preparation software like Taxslayer Pro.
7. TaxSlayer Pro tests the software with the IRS.
8. Prepared returns that are “Accepted” and forwarded for additional processing, including paper forms.
9. All of the data is stored at the IRS, and it may be viewed by authorized IRS employees.
10. XML formats are available through the IRS where TaxSlayer can allow the customers to view the return.
This list is just a basic overview of how the MeF system works. There are obviously more complexities depending on what kind of return are being prepared. Individual 1040s, corporate returns, exempt organizations and partnerships will all be under the MeF system, and the more knowledge the better. TaxSlayer Pro is constantly updating our system to comply with the XML formatting and IRS regulations. If you have any questions, please contact us.