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Many thanks to our EDINews subscribers who requested to receive our online newsletter via email. We appreciate your interest. If you're new to EDINews, catch up on the back issues then check the IRS website for the latest information. |
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NOVEMBER
2003 |
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A
Message from EDIN
Since launching our website and newsletter last month, we’ve
heard from many nonprofit organizations and foundations, large
and small, as well as individual consultants and CPAs from
across the country. Nonprofit organizations want to know whether
they will be able to e-file with both their state and the IRS.
Some accountants are enthusiastic; some are cautious.
They
want to know the incentives
for e-filing and which
companies will have Form
990 e-filing software available
in 2004. In the months
ahead, we’ll have
a lot more information,
but already some progress
is being made: Representatives
from several tax preparation
software companies say
they want to support the
IRS in its efforts to become
largely paperless. Some
plan to have e-filing software
for the Form 990 in 2004;
more are planning to have
products available in 2005.
GuideStar just received
a Department of Commerce
grant to build a web-based
state registration system,
and the National Center
for Charitable Statistics
at the Urban Institute
(NCCS) continues to encourage
states to partner with
them on a pilot project
that allows nonprofits
to e-file the Unified
Registration Statement and
complete the Form 990 online
using the NCCS Desktop990™ software
to electronically “pull” specific
data required by a state. EDIN
supports all activities
that streamline the reporting
of nonprofit data, enhance
the transparency of the
sector, and make more effective
use of limited public resources
to improve government oversight
and enforcement.
Continued
progress requires a drumbeat
of support from the nonprofit
sector, particularly from
the accountants, CFOs and
others who actually complete
the Form 990. That's why,
in addition to EDIN’s
Steering Committee, we're
building a national coalition
of national, state and
local nonprofit and foundation
leaders, state charity
officials and accountants,
and hope you’ll take
the time to “stand
up and be counted.” By
itself, electronic filing
will not solve all the
issues surrounding quality
reporting and accountability.
But it’s an important
tool, and certainly a step
in the right direction.
Let us hear from you.
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e-File
vs. Paper Returns: Audit Risk is the
Same
by Midori
Morgan-Gaide,
Manager, IRS EO Electronic Initiatives Office
A
question that inevitably
arises in any conversation
surrounding the IRS
electronic filing program
(e-file) is: “Will
an organization increase
its chances of being
audited if it files
its return(s) electronically?” The
answer is no.
While
e-file eliminates many
of these steps, it
does not change the
manner in which returns
are selected for audit
or the amount of data
used for selecting
a return for audit!
The
same return items manually
keypunched from the
paper return are automatically
extracted from the
electronic submission
and merged with the
data from paper returns.
Thus,
electronic returns
cannot be differentiated
from paper returns
during the audit selection
process. The entire
electronic file will,
however, be stored
in a separate database
for use by IRS customer
service representatives
or revenue agents when
needed.
This
chart outlines the
steps for receiving,
processing and storing
paper and electronic
returns and highlights
how they are different.
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Paper
Returns |
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Mailroom: Envelopes
are
opened
payments
extracted. |
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Sort: Returns
are
manually
sorted
by
form
number,
e.g.
990,
1040,
etc. |
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Data
Entry: Certain
data
from
returns
are
manually
keypunched
into
a
database. |
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Error
Checking: Data
is
subject
to
validity
and
consistency
checks. |
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Posting
to
Master
File: Data
from
complete
returns
are
uploaded
to
the
Master
File. |
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Data
from
Master
File
downloaded
into
another
database
used
to
create
pool
of
returns
for
audit. |
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Storage: Complete
and
final
returns
are
filed
in
a warehouse
at
or
near
the
service
center. |
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Electronic
Returns |
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Eliminated. |
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Eliminated. |
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Automated: Identical
data
is
automatically
merged
into
same
database. |
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Automated: Many
error
checks
are
completed
before
returns
are
even
accepted
for
processing. |
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No
change
in
process. |
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