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Modernized e-File (MeF) Overview

Design History

The IRS spent over three years on the design and development of a new e-file system which is often referred to as Modernized e-File (MeF). A stakeholder group comprised of tax professionals and software vendors worked closely with IRS during all phases of design, development and implementation of MeF to ensure the needs of corporations were understood.

MeF is a web-based system that allows electronic filing of corporate, individual, partnership, exempt organization and excise tax returns through the Internet. MeF uses the widely accepted Extensible Markup Language (XML) format. This is an industry standard that is used when identifying, storing and transmitting data rather than the proprietary data transmission formats used by older e-file programs.

The implementation schedule was the following:

  • 2004 - Forms 1120, 1120S, 8868, and the 990 Family were added to the MeF Platform.
  • 2005 - Form 7004 was added to the MeF Platform.
  • 2006 - Corporate Mixed returns (with 1120-L and 1120-PC subsidiaries) and Fed/State filing were added to the MeF Platform. Certain corporate returns were required to e-file.
  • 2007 - Forms 1065 and 1065-B were added to the MeF Platform in January and Form 2290 was added in August.
  • 2008 - Forms 720, 990-N, and 1120-F were added to the MeF Platform in January and Form 8849 was added in May.  
  • 2010 - Forms 1040, 4868, and 21 1040-related forms and schedules were added to the MeF Platform.
  • 2012 - The remaining 1040 Family and related forms and schedules were added to the MeF Platform.

Benefits:

  • More Explicit Error Conditions - New error code explanations pinpoint the location of the error in the return and provide complete information in the Acknowledgement File.
  • Faster acknowledgements - Transmissions are processed upon receipt and acknowledgements are returned in near real-time.  No more waiting for once or twice daily system processing cycles.
  • Integrated Payment Option - Owe Taxes? -  You can e-file a balance due return and, at the same time, authorize an electronic funds withdrawal from your bank account.  Payments are subject to limitations of the Federal Tax Deposit rules.

MeF Process Graphic

Overview of Modernized e-File (MeF) systems (pdf) This pdf graphic file visually represents the e-file process that is outlined below.  The graphic specifies corporate e-filing; however, this process is relevant to all returns filed under MeF.  (Note: To view this linked pdf document, download the most recent free version of Adobe Acrobat Reader)

Prepare and Originate Return

After the preparation of a tax return is complete and signed by the appropriate person, tax preparation software, which has been approved by IRS for electronic filing, will provide the necessary instructions to “originate” the electronic submission of the return and authorize the filing of the return via IRS e-file. During this process the electronic return data is converted into the format defined by IRS for electronic filing.

Transmission to IRS

IRS Authorized e-file Providers or Large Taxpayers may choose to transmit directly to IRS or use a third party transmitter.   Transmitters use the internet to transmit electronic return data to the IRS Modernized e-File (MeF) system.  IRS included two new internet options in the design of MeF.  Internet Filing Application (IFA) and Application to Application (A2A) were designed to meet the needs of registered transmitters who send large complex returns.  The design of the IFA and A2A features Web Services-Interoperability (WS-I) security standards as discussed in more detail below.

MeF Processing

A critical part of the MeF design was the IRS decision to use an XML format for electronic return data.  The XML format ensures the electronic return data transmitted to IRS meets all required specifications and allows MeF systems to process and view the electronic return data.  The following is a brief explanation of how electronic data received by IRS is converted to a tax return.

  1. Each line or data element on every IRS form is given an XML name tag. 
  2. Every instance of supporting data is defined and given an XML name tag. 
  3. IRS and/or contractors use the name tags to create XML schemas.
  4. IRS develops a set of Business Rules to validate the return after the return passes the XML validation..
  5. IRS provides 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 tax preparation software.
  7. Software vendors are required to test their tax preparation software with IRS and MeF systems to ensure it can correctly format and transmit electronic data to IRS. (See How Tax Preparation Software is Approved for Electronic Filing for a detailed explanation of software testing.) 
  8. After return preparation is complete, the return is originated and the return data is output into the specified XML format for electronic filing.
  9. IRS validates the transmitted files against the XML schemas and Business Rules in the MeF production systems.
  10. Returns that successfully pass validation are considered “Accepted” and forwarded for additional processing to the IRS systems used to process paper returns.
  11. 100% of the electronic return data is also stored in an official IRS repository and may be viewed by authorized IRS employees using XML stylesheets.
  12. IRS provides copies of the XML stylesheets on irs.gov where they may be incorporated into software vendor or corporation programs for viewing the return.  

Additional References

  • Electronic Communication Between IRS and Transmitters During the e-file Process
    This link provides a high level overview developed for corporations to understand how IRS communicates with the transmitter during the transmission and processing of an electronic return.  Authorized IRS e-file Providers and Large Taxpayers Authorized by IRS should follow the official guidance listed under How to Participate.

     

  • How Tax Preparation Software is Approved for Electronic Filing
    This link provides a high level overview developed for corporations to understand the process software vendors must use to create tax preparation software before it is approved by IRS for electronic filing.  Authorized IRS e-file Providers and Large Taxpayers Authorized by IRS should follow the official guidance listed under How to Participate.
Page Last Reviewed or Updated: 05-Sep-2014