11.4.2  Data Exchange Program

11.4.2.1  (07-03-2009)
Overview of the Governmental Liaison Data Exchange Program

  1. The Governmental Liaison Data Exchange Program (GLDEP) is the name given to certain data-sharing activities that take place between IRS and state tax agencies. IRS shares federal tax data with these agencies by providing them with specific data extracts on a recurring basis to assist with tax administration. A data extract is a computer-generated file that contains specific data elements. Extracts are currently provided electronically via the IRS Secure Data Transfer (SDT) program. SDT is a means to exchange files with FedState agencies electronically in a secure and automated environment over the Internet. States may choose from multiple data extracts that make up the program. For some extracts, states are required to submit input files, also known as "tickler files " , to IRS. These GLDEP tickler files must be submitted to IRS via SDT as of 6/30/2009. Previously, tickler files were submitted on 36 track cartridge.

  2. For purposes of the GLDEP, a state is defined as any of the 50 states, the District of Columbia, certain U.S. possessions or territories, and any municipality with a population in excess of 250,000 that imposes a tax on income or wages (IRC §6103(b)(5)).

  3. Although the GLDEP is managed by Data Services, a part of Governmental Liaison and Disclosure (GLD) Division, management and staff from Modernization and Information Technology Services (MITS) play a key role in the program's design and operation. Significant MITS resources are devoted to the programming and distribution of the extracts.

  4. The GLDEP minimizes the need for state tax personnel to inspect or obtain paper copies of federal tax returns and related records. Each data extract contains specific data elements that come from tax returns or accompanying documents. Information from the extracts is used in a variety of ways to assist with tax administration.

  5. The extracts may only be used as authorized by IRC §6103(d). Data is shared with state agencies based on their need and use of the data for tax administration purposes. Safeguard procedures apply to the data (IRC §6103(p)(4)). Applicable safeguard procedures may be found in IRS Publication 1075, Tax Information Security Guidelines for Federal, State, and Local Agencies.

  6. Frequently used terminology in the Governmental Liaison Program can be found in Exhibit 11.4.2-1.

11.4.2.2  (07-03-2009)
History

  1. IRS has been sharing federal tax data with state tax agencies since the 1920s. These exchanges were initially paper-oriented. Subsequently, the data was provided on magnetic media in the form of tape cartridges. Today, data is provided electronically using the IRS Secure Data Transfer (SDT) program. Initially, states were charged a small fee for obtaining extract information. In 1994, IRS waived charges so that the data is now provided free of charge.

  2. Originally, states received all information available pertaining to taxpayers residing in their state. In 1978, the Government Accountability Office (GAO) (formerly the General Accounting Office) issued a report stating that IRS needed to limit data provided to states to only the data necessary to administer a state's tax laws. In addition, the report said that IRS had additional sources of information that would be valuable to states which had not yet been tapped. In response to that report, the program was redesigned and further expanded to its current status.

11.4.2.3  (07-03-2009)
Scope of the Program

  1. The following data extracts are currently part of the GLDEP:

    • 1099-MISC

    • BMF/BRTF

    • Corporate Affiliations

    • CP 2000

    • Examination Operational Automation Database (EOAD)

    • Exam/Appeals

    • Federal Employer Identification Number (FEIN)

    • IMF/IRTF

    • IRMF

    • Individual Taxpayer Identification Number (ITIN)

    • Levy

    • Military Combat Zone

    • Non-Itemizer

    • PTIN

    • Taxpayer Address Report (TAR)

  2. There are many other data exchange activities between IRS and "FedState trading partners" that are not part of the GLDEP. More information can be found on these non-GLDEP exchanges on the My SB/SE Intranet site at the following: http://mysbse.web.irs.gov/CLD/GLD/Data/GLDEP/NonGLDEP/default.aspx . Some examples are as follows:

    1. Reimbursable Federal Program: A data exchange program between IRS and other federal agencies. This program is owned by GLD Data Services but is not part of the GLDEP.

    2. Compliance Programs: Some data exchanges are part of specific compliance programs such as Abusive Tax Avoidance Transactions (ATAT). More information may be obtained by contacting the specific Operating Division (OD) that has ownership of the program.

    3. User Applications: Some data exchanges are user applications that fall under the E-services umbrella, such as the Transcript Delivery System (TDS). More information on these programs may be obtained by contacting E-Services or the specific OD that has ownership of the application.

    .

11.4.2.4  (07-03-2009)
Communications and Marketing

  1. Internal Communications Information about the GLDEP is available internally on the My SB/SE Intranet site at http://mysbse.web.irs.gov/CLD/GLD/Data/GLDEP/default.aspx .

  2. External Communications Information about the GLDEP is provided to external partners through IRS Governmental Liaisons (GLs). Some information is also available on the Federation of Tax Administrators' (FTA) Tax Exchange web site at: http://www.taxexchange.org, and via the FTA Data Exchange ListServ. FTA is a non-profit group representing the interests of state tax administrators. The ListServ is for those personnel, both state and IRS, who work with the GLDEP. HQ GLDEP analysts at IRS use the ListServ to alert state personnel about expected release dates of extracts, to notify them of any potential problems, and to remind them of approaching deadlines. State personnel use the ListServ to explore such questions as how to better use the extracts in compliance programs and whether other states have encountered particular difficulties. To subscribe or unsubscribe to the FTA Data Exchange ListServ, personnel should to go the site http://www.taxadmin.org/fta/lists and enter e-mail name and address. Choose subscribe or unsubscribe and submit.

11.4.2.5  (07-03-2009)
Program Participation

  1. Each agency wishing to participate must meet the following criteria:

    1. The agency must have a Basic Agreement in place to exchange data with IRS that includes the Title 26 Chapter that corresponds to the extract requested.

    2. The agency must have a Safeguards Procedures Report approved by the Office of Safeguards on file with IRS.

    3. The agency must complete an Annual Enrollment Form.

    4. The agency must satisfy the requirements of IRC §6103(d); that is, the agency must be a state agency as defined in IRC §6103(b), be responsible for tax administration, demonstrate a need for the federal tax data being disclosed and show that it can use the data.

  2. There are two annual processes that state agencies must complete to participate in the GLDEP.

    • Annual Enrollment Process

    • Annual Data Selection Process

11.4.2.5.1  (07-03-2009)
Annual Enrollment Process

  1. The enrollment process takes place from the first of August until the middle of September, which provides the Governmental Liaisons and the agencies adequate time for the enrollment and approval process. Agencies wishing to participate in the GLDEP must complete an Annual Enrollment Form. The form is used by the enrolling agency to designate which extracts it would like to receive for the upcoming year. Need and Use Statements must accompany all enrollment forms. Need and Use Statements are documents used by states to tell IRS why they need the federal tax data they are requesting and how they will use that data. All Need and Use Statements submitted with Annual Enrollment Forms must be approved by an IRS Disclosure Manager (DM) before any federal data may be given to the state agency. Federal tax data is shared with state agencies based on the agency's need and use of the data.

  2. The mechanics of the Annual Enrollment Process are as follows:

    • Each year in August an "enrollment package" is sent electronically (via the IRS e-mail system) from GLD Data Services to GLs in the field.

    • GLs must then forward the package to their state counterparts. The enrollment package contains the Annual Enrollment Form, instructions for completing the form, a need and use justification form and a cover memo from the Chief, Data Services. The cover memo contains information on when and how the GL should forward completed enrollment forms to the GLDEP Administrator at the Detroit Computing Center (DCC). This is their final destination.

  3. The GL and DM will act as consultants to the enrolling agency during the enrollment process. The GL either should become involved in the process of completing the enrollment form or should review the form carefully when received by the enrolling agency. If a tax agency is ordering an extract not previously ordered, the GL must discuss how the agency plans to use the information. If an agency is not ordering an extract they have ordered in the past, the GL should question the omission of that extract. The more familiar a GL becomes with the operation of agencies within their jurisdiction, the better able they will be to assist the agency with their decision regarding which federal tax data to request.

11.4.2.5.2  (07-03-2009)
Annual Data Element Selection Process

  1. The Annual Data Element Selection Process takes place in the spring of each year. Agencies that have requested either the IMF/IRTF and/or BMF/BRTF extract must complete an Annual Data Element Selection Form. The data element selection form is used by the enrolling agency to designate which of the optional data elements for these extracts it would like to receive. Need and Use Justifications must accompany all data element selections. Need and Use Justifications, in this case, are statements used by states to tell IRS why they need the specific data elements they are requesting and how they will use those data elements. All Annual Data Element Selection Forms must be approved by an IRS Disclosure Manager (DM) before the data elements being requested may be given to the state agency.

  2. The mechanics of the Annual Data Element Selection Process are as follows:

    • Each year in May a "data element selection package" is sent electronically (via the IRS e-mail system) from GLD Data Services to GLs in the field.

    • GLs must then forward the package by e-mail to their state counterparts. The data element selection package contains the Annual Data Element Selection Forms, instructions for completing the forms, an Authorization Document, and a cover memo from the Chief, Data Services. The cover memo contains information on when and how the GL should forward completed data element selection forms to the DCC, their final destination.

  3. The GL and DM will act as consultants to the enrolling agency during the data element selection process. The GL either should become involved in the process of completing the data element selection form or should review the form carefully when received from the enrolling agency. The state agency mails (traceable mail) the Data Element Selection Forms on a CD (with a signed hard copy of the Authorization Document) to the GL.

11.4.2.6  (07-03-2009)
Specification Books

  1. Each data extract has a specification book, or "spec book, " that serves as a technical and administrative user guide for both state and IRS personnel. The spec books contain 3 basic sections:

    • Administrative Section

    • Record Layout

    • Core Record Layout

  2. The administrative section contains a basic description of each extract including information on production and distribution schedules, disclosure and security issues, annual changes to the extract, tickler tape submission instructions, and labeling procedures. This section also has information on the file(s) from which the data is extracted.

  3. The record layout section contains a narrative description of the various data elements contained in the extract.

  4. The Core Record Layout section contains graphic representations of the data for use by programmers.

  5. The spec books are distributed in the following manner:

    • As each spec book is revised, it is sent electronically from GLD Data Services to GLs in the field.

    • The GLs distribute the books to enrolled agencies approximately two months prior to the distribution of the data extract.

    • The spec books are also posted to the GLD SharePoint site: http://wsep.ds.irsnet.gov/sites/co/dcse/sbse/cl/GLD2/DS/GLDEP/Specification%20Books/Forms/AllItems.aspx .

  6. The GL is responsible for ensuring that each participating agency receives a current copy of a spec book for each data extract the agency has requested.

11.4.2.7  (10-05-2006)
Description of the Extracts

  1. There is a great deal of variance among the extracts with regard to production and distribution schedules, how the data is sorted, and the time period upon which the extract is based. Some extracts are based on tax year and some on "extract year." If an extract is based on tax year, all data in that extract is from a specific tax year. The term extract year indicates that IRS has determined the time period of the extract based on various factors that affect production. These factors may include the due date of returns included in the extract or availability of resources for extract production.

  2. Extracts are sorted by various criteria including state code, zip code, SSN or EIN. Some extracts require that a tickler file be submitted by participating agencies so that the agency may request information about specific taxpayers. A tickler file, or tickler tape, is an input file that is merged with IRS data to produce the requested extract. For example, a state may provide IRS with a tickler file of SSNs to be used in production of the IMF/IRTF extract by SSN. The formats for the various tickler files are found in the respective spec books.

  3. Extracts that are distributed on an annual basis have a 60-day data recreation period. This means that if an agency notifies the IRS computing center within 60 days that a file cannot be read, the computing center can recreate the extract cartridge for the agency. For extracts that are distributed on a more frequent than annual basis the extract specification book will address the recreation period, if any. It is imperative that agencies read extracts upon receipt. If it is determined that an extract is damaged after the data recreation period, the computing center may not be able to recreate the extract for the agency.

11.4.2.7.1  (10-05-2006)
1099-MISC

  1. Source of Data: Data is extracted from the IRS Information Returns Master File (IRMF). The 1099-MISC extract provides non-employee compensation information from the federal Form 1099-MISC.

  2. Distribution: The 1099-MISC extract is distributed annually in April.

  3. Uses:

    1. The 1099-MISC extract was developed in response to a request by the federal Department of Labor (DOL), based on a recommendation by the DOL Office of Inspector General. The non-employee compensation data as reported by payers is to be used for tax administration by the State Workforce Agencies (SWAs) as a component in the audit selection process to increase the discovery of unreported wages. Information provided under IRC §6103(d) through the GLDEP may not be used for purposes other than tax administration such as the administration of benefits. The payment information provided on the extract is limited to Box 7 (Non-employee Compensation) of the Form 1099-MISC.

    2. The 1099-MISC extract was initially developed to provide Form 1099-MISC non-employee compensation (Box 7) information to SWAs by payee state code, that is, the address of the recipient of the income. This information is also available on the IRMF extract but the IRMF provides more information than the SWAs need. After the initial year of distribution, an enhancement was added to include records on the extract by payer state code, that is, the address of the payer, in addition to payee state code.

11.4.2.7.2  (07-03-2009)
BMF/BRTF

  1. Source of Data: The BMF and BRTF are master files created from returns filed under the business income tax reporting requirements of the Internal Revenue Code (IRC). These extracts are developed by taking data from the BMF and BRTF master files annually by state code, ZIP code, and taxpayer identification number (TIN). The BRTF information is as initially processed and is not updated to reflect amended returns or adjustments. Agencies must receive the BMF to get the BRTF, as name and address information is only included on the BMF; the only exception is that an agency may obtain the BRTF only for the Form 706 which includes name and address information. Participants may enroll to receive the extracts by state code, ZIP code, and/or employer identification number (EIN).

  2. Distribution: The BMF and BRTF extracts are created and shipped separately. They are distributed annually in October, November and December, depending on the sort (State Code, ZIP Code and EIN).

  3. Uses: General uses of the BMF/BRTF extract include:

    • Identifying non-filers

    • Determining discrepancies between federal and state returns

    • Verifying taxpayer data in state agency records

    • Assisting with collections by identifying business assets and determining ability to collect

11.4.2.7.3  (10-05-2006)
Corporate Affiliations

  1. Source of Data: Data is extracted from the IRS Business Master File.

  2. The extract will provide entity information on parent corporations filing a consolidated return as well as on the subsidiary corporations in the affiliated group on whose behalf the parent filed. When a parent corporation files a consolidated return (Form 1120, U.S. Corporation Income Tax Return), a Form 851, Affiliations Schedule, is attached which lists the subsidiary corporations in the affiliated group. The Corporate Affiliations Extract by State Code (a range of zip codes will be used for city taxing agencies) will provide state agencies with entity information on parent and subsidiary corporations. Records for state taxing agencies will be extracted based on a subsidiary corporation having an address within the state of the requesting state taxing agency (by state code). When a subsidiary corporation's address matches the state of the requesting agency, the requesting agency will receive a set of records that will include all subsidiary corporations in the affiliated group and the parent corporation, regardless of what state the parent or the other affiliated subsidiaries are located.

  3. Records are extracted by state code based on the subsidiary corporation appearing on a Form 851. A subsidiary corporation will only be associated with the most current parent corporation that is filing on their behalf.

  4. In addition to the state code sort, beginning with Extract Year (EY) 2005, the extract is also available by an EIN sort based on a tickler file submission by enrolled agencies. City taxing agencies can receive the extract based on an approved list of zip codes or by EIN sort.

  5. Distribution: The Corporate Affiliations Extract by State Code and EIN are scheduled to be distributed annually in September of each year.

  6. Uses: General uses of the Corporate Affiliations extract include:

    • Data used as a component in the audit selection process for corporations filing a consolidated return

    • To identify non-filers

11.4.2.7.4  (10-05-2006)
CP 2000

  1. Source of Data: The Computer Program (CP) 2000 extract contains information from IRS Underreporter cases. IRS matches information returns, such as Form W-2 and Form 1099 filed by employers, banks, businesses, and other payers with information from individual tax returns. Discrepancies are reviewed and, if not resolved at the campus, an automated Underreporter (AUR) case is generated. Notice CP 2000 is sent to the taxpayer proposing an adjustment to their account. Taxpayer information from accounts, that result in additional federal assessments, is provided in the extract for participating states.

  2. Only fully agreed cases are provided on the CP 2000 extract. After the assessment, a taxpayer may provide information that could result in an adjustment or abatement of the liability. If changes are made to the fully agreed cases, there is currently no way to capture the information by IRS. It may be necessary for the agency to contact the taxpayer to resolve the issue. Partially agreed case amounts are not included in the file. Inventory levels on the CP 2000 extract vary as the inventory levels worked at the campuses fluctuate.

  3. Distribution: The CP 2000 extract has an irregular distribution schedule with 6 distributions over approximately 20 months, followed by a one-time SSN tickler option (Distribution #7).

  4. Uses: General uses of the CP 2000 extract include:

    • Generating a notice of proposed assessment based on federal tax changes

    • Identifying employers and payers not reporting to the state

    Note:

    The CP 2000 extract presents one of the easiest methods for state departments of revenue to generate correct assessments and increase collections. An automated program in the state can be developed to generate an assessment letter to the taxpayer based on the federal assessment. When automation is used, few cases need to be worked manually. States which generate assessments and collect additional revenue based on the federal assessment, are able to do so with minimal cost.

11.4.2.7.5  (07-03-2009)
Examination Operational Automation Database (EOAD)

  1. Source of data: Examination closing reports systems:

    • EOAD

    • Reports Generation Software (RGS)

    • Audit Information Management System (AIMS)

    Enrolled agencies provide specific criteria for use in getting information about the following return types:

    • Form 1040

    • Form 1065

    • Form 1120

    • Form 1120S

  2. Distribution: Monthly beginning in February of each year, with data extracted from previous month, for the period January through December.

  3. Uses: Uses of the EOAD extract include (same as for Exam/Appeals):

    • Ensure reporting of audit changes on businesses operated in one state but registered in another

    • Identify individuals residing in one state but with a filing requirement in another

    • Develop leads on non-resident taxpayers to determine the impact of Federal audit assessments on state liability

    • Determine the impact of Federal audit assessments on state tax liabilities

11.4.2.7.6  (07-03-2009)
Exam/Appeals

  1. Source of Data: Examination records reflect results of individual and/or business cases closed by Examination during a fiscal year (October 1st - September 30). The data is extracted annually from the IRS database, the Audit Information Management System (AIMS). The Appeals records provide the same type of information pertaining to cases closed by Appeals during a calendar year (January 1 - December 31). This information is taken from the IRS database, Appeals Management Information System (LAND).

  2. The state submits an annual tickler tape of TINs to generate the extract. This tickler is due by April 30th each year.

  3. Distribution: The extract is distributed annually in May.

  4. Uses: General uses of the Exam/Appeals extract include:

    • Identifying individuals residing in one state but with a filing requirement in another

    • Developing leads on non-resident taxpayers

    • Determining the impact of federal audit assessments on state tax liabilities

    • Ensuring reporting of audit changes on businesses operated in one state but registered in another

    Note:

    Document 6036, Examination Division Reporting System Codes Booklet, is useful in interpreting the coding for this extract and should be supplied by the GL to the state tax agency receiving the extract.

11.4.2.7.7  (07-03-2009)
Federal Employer Identification Number (FEIN)

  1. Source of Data: The data for the FEIN extract is obtained from the Business Master File using the EIN Research and Assessment System (ERAS). The source of that file is the federal Form SS-4, Application for Employer Identification Number. The newly issued FEINs will be provided monthly regardless of how the FEIN is issued i.e., Internet EIN, fax, or mail. This extract will be sorted by the address of the entity receiving the new FEIN for the state code sort and further sorted for the cities based on a pre-approved listing of zip codes. The majority of data elements (line items) from the Form SS-4 are captured.

  2. Distribution: The FEIN extract is distributed monthly. The distribution year runs from February to January. Each distribution will consist of new FEINs issued in the previous month.

  3. Uses: General uses of the FEIN extract include:

    • Validating master file accounts

    • Identifying businesses that are required to register

    • Identifying non-filers

    • Outreach

11.4.2.7.8  (07-03-2009)
Individual Taxpayer Identification Number (ITIN)

  1. Source of Data: The information will be extracted from the Individual Taxpayer Identification Number (ITIN) Database which contains information captured from the Form W-7 application. ITIN information can also be obtained from the IMF/IRTF extracts. All of the information provided by the taxpayer will be included in the data fields provided to the requesting state agencies. The information on this extract is similar to the FEIN extract, except it is for individual returns instead of business returns. Only validated ITINs will show up in this extract. ITINs always begin with a " 9" and will have the numbers "70" to " 88" as the 4th and 5th digits.

  2. Distribution: The ITIN extract is distributed from February through January on a monthly basis. All ITINs issued for the previous month will be included. There is also a TIN tickler option. The annual tickler is due in November, and the output file is distributed the following January. Agencies enroll for the tickler option separately on the annual enrollment form.

  3. Uses: General uses of ITINs include:

    • Reducing erroneous refunds

    • Determining the validity of state entity data

    • Providing state refunds to those taxpayers who rightfully are entitled to them

    • Identifying Non-Filers

11.4.2.7.9  (10-05-2006)
Individual Master File/Individual Return Transaction File (IMF/IRTF)

  1. Source of Data: The IMF/IRTF extract contains data from the Individual Master File (IMF) and the Individual Returns Transaction File (IRTF).

  2. The IMF contains general entity information (SSN, name, address, wages, adjusted gross income, interest income, etc.) for individual income taxpayers.

  3. The IRTF contains fields currently transcribed from Form 1040, U.S. Individual Income Tax Return, Form 1040A, or Form 1040EZ, Income Tax Return for Single Filers and Joint Filers With No Dependents, and their accompanying forms and schedules. IRTF information is obtained from the tax return as originally filed by the taxpayer but can reflect math error corrections. The information is not updated to reflect amended returns or subsequent adjustments. Data in these records will reflect any corrections that were made by the campus before the return could be posted (math error corrections). Information that is obviously incorrect, such as math errors, cannot be posted to master file. When a math error is corrected, a notice is sent to the taxpayer explaining the change. Brief explanations of these notices are included in the IMF/IRTF specification book.

  4. Since the IMF contains entity information and IRTF does not, the files must be received together. The state may receive their IMF/IRTF extracts based on the address of the taxpayer as indicated on the federal return (state code), by state supplied zip code (zip code tickler file) or state supplied SSNs (the SSN tickler file can include Individual Tax Identification Numbers, ITINs). IMF/IRTF extracts by zip code are most frequently requested by cities, allowing the cities to receive information on taxpayers located within their jurisdiction.

  5. Production:

    1. At the end of August (cycle/week 34), a major extract is created from the IMF and the IRTF. It contains one record for every account posted during the past 12 months. The IMF/IRTF extract is created the same week in August each year and reflects any returns that have posted since the previous extract whether current or prior-year returns. It is sorted by state code and sent to each participating agency.

    2. At the end of October (cycle/week 43), the same major extract is resorted by zip code and matched to zip code tickler tapes provided by the agencies.

    3. At the end of November (cycle/week 48), the extract is again sorted, this time by SSN then matched with SSN tickler tapes provided by the agencies.

  6. Distribution: The IMF/IRTF extract is distributed annually in September by state code sort, in October by zip code sort, and in November by SSN sort.

  7. Uses: General uses of the IMF/IRTF extract include:

    • Identifying non-filers

    • Determining discrepancies between federal and state reported income

    • Using Schedule C information for compliance leads

11.4.2.7.10  (07-03-2009)
Information Returns Master File (IRMF)

  1. Source of Data: The IRMF extract contains data from the Information Returns Master File (IRMF) which is a database containing all information returns transcribed by IRS. It contains data about both the payer (filer) as well as data about the payee (recipient of income) from various forms including Form 1099, Form 1098, Schedule K-1, and Form W-2.

  2. The IRMF Extract by Payee State Code is provided annually to the states by payee state code. Records are included in this extract based on the payee (recipient of income) having an address within the requesting agency’s state.

  3. The IRMF Non-resident extract includes records based on the address of the Payer being within the requesting agency’s state and the address of the Payee being outside the requesting agency’s state. Schedule K-1s for Forms 1041, 1065 and 1120S are included on the Non-resident extract. Forms W-2 and 1099-MISC can also be requested on the Non-resident extract.

  4. The IRMF extracts are large files. Each file takes approximately 18 months to create.

  5. Distribution: The IRMF Extract by Payee State Code is scheduled for June distribution. The IRMF Non-Resident Extract is scheduled for September distribution. If multiple addresses are present on the IRMF by Payee State Code Extract, each state participating in the extract receives all information returns for that taxpayer.

    Example:

    If a taxpayer receives two Forms W-2, one listing a home address in Illinois and the other listing a home address in Wisconsin, both states will receive all information returns for that taxpayer.

  6. The IRMF extracts are divided into 26 segments (files) using the last two digits of the payee's TIN as the indicator for the divisions.

  7. Uses:

    • Identifying underreporters

    • Identifying excess deductions

    • Identifying employers who are withholding but not remitting

    • Matching Schedule K-1 data to state databases to identify resident and non-resident non-filers

11.4.2.7.11  (10-05-2006)
Levy

  1. Source of Data: The Levy extract contains data extracted from the IRMF and reflects payer and payee data for specific taxpayers from Form 1099-INT, Form 1099-DIV, Form 1099-MISC, Form 5489, Schedule of Reimbursable Earnings, and Form W-2, as well as Schedule K-1.

  2. The data is extracted monthly using a state tickler file that contains the name control and TIN of payers. States enrolled for the Levy extract will receive an output file for each month that they submit a tickler file; however, they need not submit a tickler file every month.

  3. Distribution: Distribution is on a monthly basis dependent on a tickler submission. The distribution year begins in May each year and continues until April of the following year.

  4. Uses: General uses of the Levy extract include:

    • Locating names of payers of income for levy sources

    • Identifying current address information

    • Identifying income from out-of-state sources

    • Identifying active military personnel for removal from non-filer lists

11.4.2.7.12  (07-03-2009)
Military Combat Zone

  1. Source of Data: The Department of Defense (DOD) Active Duty Military Combat Zone personnel information (PC 500 Combat Zone) file is received by the IRS on a monthly basis and posted to the IRS Master File.

  2. The extract file contains a combat zone entrance date and exit date for all active duty military personnel that DOD has identified as deployed in a military combat zone. The file includes full-time and reserve personnel from the five branches of the military (Army, Navy, Air Force, Marines and Coast Guard) as well as National Guard personnel (Army and Air Force). Data is validated by each branch of service. The extract will be sorted by state code (address of taxpayer) using the legal state of residence from military records. This extract is not available to city agencies because the zip code is not captured by DOD and this would be the only way cities could be authorized to receive the information.

  3. Distribution: The Military Combat Zone extract will be distributed monthly beginning in January and ending in December each year.

  4. Uses: The Military Combat Zone extract will be used to suspend collection efforts and/or enforcement actions against military personnel while serving in a combat zone.

11.4.2.7.13  (07-03-2009)
Non-Itemizer Extract

  1. Source of Data: Data is extracted from the IRS Individual Master File (IMF) and the Individual Return Transaction File (IRTF). This extract is available to states based on state code and to cities based on ZIP Codes.

    The Non-Itemizer extract provides a list of individuals who did not itemize on their prior year Federal income tax return. The extract is based on the address of the taxpayer as indicated on the Federal return (state code sort). By matching extract data with state refund recipients, agencies can identify those refund recipients who did not itemize on their prior year Federal tax return. Because these taxpayers did not itemize, the state is not required to issue Forms 1099-G to these taxpayers, therefore providing a cost and resource savings to the state. There will be a record on the Non-Itemizer extract as long as there is not a duplicate or amended return posted for the same tax year.

  2. Distribution: The Non-Itemizer extract is distributed annually in November.

  3. Uses: Uses of the Non-Itemizer extract include:

    • Identification of state refund recipients who did not itemize on their prior year Federal tax return, eliminating the need for an agency to send Form 1099G

11.4.2.7.14  (07-03-2009)
Preparer Tax Identification Number (PTIN)

  1. Source of Data: Data is extracted from an IRS file known as the PTIN Cross-Reference Database and the National Accounts Profile (NAP). The PTIN extract provides the SSN and the PTIN for paid preparers nationwide who have been issued a PTIN. Any paid preparer may apply for a PTIN using Form W-7P, Application for Preparer Tax Identification Number. The PTIN is used as an identifying number by paid preparers who do not want to disclose their SSN on returns they prepare.

  2. Distribution: The PTIN extract is distributed quarterly in January, April, July and October and is cumulative.

  3. Uses: Providing the PTIN extract to state taxing agencies allows practitioners the added security of using the IRS PTIN on the state returns while allowing the state agency to continue compliance and education programs with practitioners.

11.4.2.7.15  (07-03-2009)
Taxpayer Address Request (TAR)

  1. Source of Data: The source of data for the TAR extract is the IRS individual Master File (IMF). The extract contains taxpayer address data from the Individual Master File and is based on a state supplied tickler file containing the SSNs and name controls of specific taxpayers.

  2. Accounts for married individuals are established on the IMF using the SSN of one spouse as the primary SSN. Submissions for TAR will be run against the Spouse-Primary Cross-Reference File to determine the primary SSN. Primary and secondary SSNs and the taxpayer's name and address will be extracted for the tape returned to the state tax agency. In addition, the latest tax module year is provided to establish currency of the information.

  3. Distribution: This extract is distributed weekly from February through January in response to a state-submitted tickler file. Participants who enroll during the enrollment period can begin to submit ticklers in February the following year.

  4. Uses: Some uses of the TAR extract include locating taxpayers that have moved as well as those who are delinquent.

    Note:

    Federal agencies may receive address information through TAR under IRC §6103(m)(2), (3), (4), (5), and (7).


    However, federal agencies are not permitted the same disclosures as the state taxing agencies. The federal TAR extract is very separate from the GLDEP state TAR extract. The federal TAR extract is NOT part of the GLDEP. Federal agencies reimburse the IRS for this service.

11.4.2.8  (07-03-2009)
Legal Issues: Safeguards, Disclosure, Need and Use

  1. Safeguards: Each state tax agency receiving federal tax data via the GLDEP is responsible for safeguarding the confidentiality of the data in accordance with IRC §6103(p)(4) and for maintaining the integrity of the data if commingled with data from other sources. The IRS Office of Safeguards is responsible for safeguard oversight of state agency compliance with IRC §6103(p)(4). Refer to IRM 11.3.36 , Safeguard Review Program for more information.

  2. Disclosure: The sharing of federal tax data via the GLDEP is governed by IRC §6103. All requests for data from state agencies must be approved by an IRS Disclosure Manager (DM).

  3. Need and Use: Federal tax return data may be obtained by state tax agencies via the GLDEP to the extent that the data is needed for and is reasonably expected to be used for, state tax administration under the jurisdiction of that agency. The data may not be used for any purpose inconsistent with the state tax administration responsibilities of that agency. Oversight of compliance with the need and use provisions is a function of both the Office of Safeguards and GLD. Refer to IRM 11.3.36, Requests and Demands for Testimony and Production of Documents, and IRM 11.3.32, Disclosure to States for Tax Administration Purposes , for more information.

11.4.2.9  (07-03-2009)
Unified Work Request (UWR)

  1. An annual Unified Work Request (UWR) is required for each data extract. The Work Request (WR) must be submitted before the programming/processing of the extract can begin. Any request for changes must be included in the WR. The submission of WRs for the GLDEP is the responsibility of the GLDEP analysts on the Data Services staff.

  2. The WR process is used by the business area and MITS to request, control, and monitor changes to information systems. The WR process provides a vehicle for formal communication about information systems requirements between the business area and the MITS office being asked to do the work. The WR process serves as a communications, configuration management and documentation tool for the IRS to manage resources.

  3. The WR coordinator for a specific business area has primary responsibility for assisting the WR originator in entering and tracking individual WRs in the Unified Work Request (UWR).

  4. The Demand Management Executive Advisory Committee sets the due date for work requests based on work request operational dates. The due dates will be either in June or December each year.

11.4.2.10  (10-05-2006)
Testing of Data Exchanges

  1. Validity Testing: Testing the validity of GLDEP extract data before extract distribution ensures the integrity of the data. It also ensures that assessments made as a result of the exchange of data can withstand the administrative appeals process and the scrutiny of an internal audit.

  2. Roles and responsibilities of participants in the testing process are as follows:

    1. MITS will build checks into the GLDEP extract programming/processing to ensure extract output criteria are met. When extract programming/processing criteria is not met, it can cause extract processing to abort. At the IRS Computing Centers, MITS Quality Review teams review the extract content to ensure that only agencies enrolled in the GLDEP receive the federal tax information for which they are enrolled.

    2. Secondary testing of the extracts is also accomplished in addition to the regular testing/quality review accomplished by MITS. For secondary testing, MITS provides a GLDEP analyst with a min-max report or a data string of sample records to be reviewed. The GLDEP analyst examines the records to ensure attributes such as tolerances, field population (alpha/numeric), and state code are as expected. Secondary testing is accomplished at least every five years for each extract and/or when there is a significant change to the extract programming.

  3. For certain extracts such as the IMF/IRTF and BMF/BRTF extracts, secondary testing can also be accomplished in conjunction with select state agencies, in addition to the regular testing/quality review accomplished by MITS. Prior to the production run for the extract, MITS sends out a test extract to the test state agencies. The GLDEP analyst provides the test agencies with an advance copy of the extract record layout and test criteria. When a test state discovers a problem, they should notify their GL who should in turn notify the Data Services Branch GLDEP team. The GLDEP team will work with MITS personnel responsible for programming and production of the extract to resolve problems, keeping the GL informed of progress. In some cases, it is necessary for state and IRS programmers to communicate directly. In these cases, the contact will be coordinated through the GL and the GLDEP team.

11.4.2.11  (07-03-2009)
Enhancement Procedures (Procedures for Requesting Changes to the GLDEP)

  1. Agencies that participate in the GLDEP may request enhancements or changes to the program. The "IRS Governmental Liaison Data Exchange Enhancement or Data Availability Request Form" must be used to request GLDEP enhancements. The form must also be used to ask about the feasibility of an enhancement. This form can be found in Data Services SharePoint site: http://wsep.ds.irsnet.gov/sites/co/dcse/sbse/cl/GLD2/DS/GLDEP/Enhancements/Forms/AllItems.aspx .

    Example of a Request: If an agency wants to know if a particular data element can be made available but has not yet decided whether or not they want to actually request that the data element be made available, the form must still be used. The reason for this is that it often takes as many resources and as much time to determine the availability of a data element as to actually make the data element available.

  2. The form includes detailed instructions on how to submit a request to HQ and is designed to assist the GL in helping the state through the enhancement request process. The form prompts the GL and the state counterparts to think through the request and answer the many questions that arise. The request should be as specific and complete as possible.

  3. These enhancement request procedures apply only to the GLDEP extracts listed at IRM 11.4.2.3.

11.4.2.11.1  (10-05-2006)
General Procedures

  1. IRS can only provide data that is currently transcribed to IRS Master File. IRS cannot incur expenses for transcribing data not required for federal tax administration.

    Note:

    Participating agencies requesting enhancements and data availability should recognize that the process within IRS could be a time-intensive process.

  2. If a tickler file will be submitted as part of the agency request, the following information is required:

    • List all fields proposed to be included on the tickler file that is submitted to IRS

    • Indicate the frequency of proposed tickler submissions (annually, monthly or weekly)

    • Determine approximately how many records will be on each tickler file

    • List all fields requested to be part of the output file (IRS file sent to agencies)

11.4.2.11.2  (07-03-2009)
Participating Agency Procedures

  1. Any state or city covered by IRC §6103(d) and currently enrolled in the IRS GLDEP may use the enhancement process.

  2. The agency must identify the specific information requested by preparing and submitting the request form to the GL. The GL can assist with research and preparation of the request form. A need and use justification must also be provided. If the request is for additional data elements, the request must contain the specific line items (data elements) requested.

11.4.2.11.3  (10-05-2006)
Governmental Liaison (GL) Procedures

  1. GLs must research the request to determine if it is a potential enhancement or a request for data availability.

  2. GLs must attach a statement of the detailed research conducted for the request. The following documents will help the GL in determining if the requested information is currently offered or if the request is valid:

    • Extract specification book for the presence of the form or data

    • Annual enrollment form and data element selection form to determine if the data is already offered and if the agency has previously requested the data elements

    • IRS forms and publications to confirm the information description

    • Document 6209, ADP and IDRS Information, for status indicators not found on forms

    • Data dictionaries of any database with field IRS users, such as the Midwest Automated Compliance System (MACS), Public Information Listing (PIL), Preparer's Inventory Listing (also PIL), and Audit Information Management Systems (AIMS). This is useful to document format, source, and description of data requested.

  3. The GL will forward the request to the appropriate Disclosure Manager (DM) (based on the requesting state) for review and approval before submitting it to the GLD Area Manager (AM).

11.4.2.11.4  (07-03-2009)
Disclosure Manager (DM) Procedures

  1. The DM reviews the request for appropriate need and use justification and approves/denies the proposed need and use. If approved, the DM signs the request form indicating approval of the need and use based on the information available and returns the request to the GL.

  2. If the DM determines the need and use justification provided by the agency is not adequate for approval, the DM will prepare a denial letter and forward it to the HQ Office of Disclosure for concurrence. Upon concurrence of the denial letter by the HQ Office of Disclosure, the DM will notify the GL. The signed denial letter should be returned to the GL to be forwarded to the requesting agency.

11.4.2.11.5  (07-03-2009)
Data Services Responsibilities

  1. A GLDEP enhancement process coordinator will review the request for completeness. The request will then be assigned to a Data Services GLDEP analyst who will forward the request to MITS. The analyst will work with MITS to prepare a Work Request or any other required documents and keep the GL informed of progress. The response from MITS may take as long as 90 days. Once a definitive response is received, the GLDEP analyst will complete a separate " HQ Enhancement Request Determination Form" and return it to the GL with a copy to the appropriate AM. The GL will then prepare a response and provide it to the requesting agency.

Exhibit 11.4.2-1  (07-03-2009)
Glossary

Basic Agreement:
  Agreement on Coordination of Tax Administration executed by the Commissioner of the Internal Revenue Service and the head of a state tax agency.
Data Element:
  Any item of information such as an SSN that can be selected from a return. May also be called a field.
Extract:
  A computer-generated file that contains specific data elements.
Record:
  A set of data elements.
Unified Work Request (UWR):
  A process used to request services from Modernization and Information Technology Services (MITS). The UWR serves as the official agreement or contract between MITS and the requesting office. The term UWR is also used to refer to the resulting document containing the specifics of the UWR process.
Specification Book:
  A technical and administrative user guide for extracts that are part of the Governmental Liaison Data Exchange Program (GLDEP) for use by both state and IRS personnel. Also called a spec book.
Secure Data Transfer (SDT):
  Secure Data Transfer (SDT) is a means to exchange files with FedState agencies electronically in a secure and automated environment over the Internet. SDT is currently used to deliver outgoing files to FedState agencies.
Tickler File:
  A tickler file is an input file that is merged with IRS data to produce a specific data extract. Tickler files must be submitted to IRS via SDT as of 8/1/2009. Previously tickler files were submitted on 36 track cartridge.

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