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Washington D.C.
Saturday, September 23, 2023

IRS Updates Industry on Enterprise Digitalization, Anticipates Digital Intake Support Solicitation

The purpose of this special notice is to provide an update on the digitalization activities of the Enterprise Digitalization Office, which spearheads IRS efforts to empower taxpayers and IRS employees to rapidly resolve issues in a simplified digital environment. Specifically, it will: 1) provide a brief update on the Digital Intake initiative; and 2) outline a potential Fiscal Year 2023 (FY23) procurement need for continued/additional Digital Intake efforts.

In Calendar Year (CY22), Enterprise Digitalization began scanning and e-Filing a small number of Employee’s Annual Federal Unemployment Tax Return (F940) that were submitted in paper. Through a process that we call Digital Intake, machine-readable data was extracted from the paper tax forms, and used to submit the F940 via Modernized e-File (MeF). Previously, the IRS primarily captured this data via a manual transcription process which was, at times, assisted by scanning technology. In essence, Digital Intake takes a paper tax form and using technology to change typed and handwritten information into data, and e-Files it.

In CY23, Enterprise Digitalization expanded Digital Intake to a much larger number of F940s and added Employer’s Quarterly Tax Return (F941) and U.S. Individual Income Tax Return (F1040) to its portfolio. This has resulted in the IRS increasing the number of forms going through the Digital Intake process by more than 100x in 9 months. These efforts have been supported by a partnership with the Bureau of Fiscal Service’s Lockbox program, and industry partners who responded to multiple solicitations issued using the Pilot IRS framework, specifically the Scanning-as-a-Service and Submission Processing Modernization efforts.

Given the success of Digital Intake to date, the IRS currently anticipates issuing a solicitation in FY2023 to support and expand Digital Intake; this effort pertains to and will fall under the auspices of Initiative 1.2 (Digitalization) of the Inflation Reduction Act Strategic Operating Plan[1]. It is important to note that although the IRS has an understanding of the current path(s) and forms for Digital Intake via Modernized e-File (MeF) and intends to use these for the base period (e.g., 940, 941, and 1040 via MeF), future efforts may change and expand in terms of intake options and end-to-end processing.  Additionally, more tax returns/forms will likely be added to the portfolio.

The IRS also plans to continue its approach of testing multiple firms and solutions for their ability to address this challenge and continuing to fund only those that work.  Notwithstanding, the Pilot IRS approach will not be utilized, given the anticipated size of the resulting contracts.

The IRS will continue to engage with industry partners and provide information on this potential solicitation, which may include a Request for Information, Pre-Solicitation Conference, Listening Session, or comparable activities.

[1] IRS Inflation Reduction Act Strategic Operating Plan | Internal Revenue Service

Read more at SAM.gov

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