[Federal Register Volume 69, Number 88 (Thursday, May 6, 2004)]
[Notices]
[Pages 25464-25465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-10361]



[[Page 25464]]

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DEPARTMENT OF TREASURY

Internal Revenue Service


Addition of New Transmitter Encryption Options for Acceptance 
Testing in November 2004 and Discontinuance of Non-Encrypted Options 
for IRS e-file by November 2005

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice.

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SUMMARY: Internal Revenue Service will provide the ability for IRS e-
file program participants, who transmit directly to the Electronic 
Management System (EMS), to use approved encryption methods for the 
2005 and later filing seasons, beginning with the Acceptance Testing 
System (ATS) in November 2004. For the 2005 filing season, IRS intends 
to begin discontinuing support of non-encrypted transmissions whether 
by dedicated or dial-up links on the Public Switched Telephone Network 
(PSTN) with complete phase out by November 2005. Authorized IRS e-file 
Software Developers should request a copy of the Interface Control 
Document (ICD), which describes requirements for Internet filing that 
utilizes Secure Sockets Layer (SSL) Version 3.0 with 128-bit encryption 
keys in an operational mode using the current modem based file 
transmission commands within a client commonly termed ``TELNET/S''.

DATES: Authorized IRS e-file Software Developers should request the 
``Interface Control Document Between External Trading Partners and 
Electronic Management System for Encryption'' from the Internal Revenue 
Service by May 28, 2004. Instructions for testing will be provided to 
the authorized developers at a later date.

SUPPLEMENTARY INFORMATION: This information pertains to IRS e-file 
software developers who prepare software packages for direct dial-up 
transmission to IRS e-file EMS sites for individual and business 
electronic returns and electronic tax documents. This is for the 
Internet filing replacement of the current dial-up transmissions to the 
EMS but not for the Forms 1120 and 990 series submitted to the 
Modernized e-file platform through the Registered User Portal. If the 
software package for direct filing to IRS EMS provides for Internet 
filing, it must include an interface to the IRS EMS Front-End 
Processing Systems' Encrypted Interface URL site. For the 2005 filing 
season, IRS does not plan to include Internet connectivity for state 
taxing authorities who retrieve state returns from the State Retrieval 
Systems located in Austin, TX and Memphis, TN. IRS does plan to offer 
the States secure Internet access for 2006.

Background

    The Internal Revenue Service is charged with protecting taxpayer 
information using the most feasible, efficient and appropriate methods 
of protection available. Encrypting the transmissions between the 
trading partners and the IRS would enhance and complete the existing 
security provided by the trading partners' systems and by the IRS 
security zone.

Dedicated Line Filers

    Based on an analysis of various e-file trading partner 
capabilities, the Internal Revenue Service announces that effective for 
the 2005 Filing Season, it will begin the use of a minimum 128-bit FIPS 
approved but trading partner-chosen, procured, and installed method of 
encryption for use on trading partner-provided dedicated line(s). These 
dedicated lines may continue to be terminated at the Austin and Memphis 
EMS locations and will permit use of the existing TELNET and FTP 
protocol methods. IRS will send to each dedicated line trading partner 
a revised annual Dedicated Leased Line Application on which the Trading 
Partner will be able to identify the evaluation number referencing the 
chosen encryption method (e.g., Brand, Model Number, FIPS 140-x, 
Evaluation Number xxx, and Evaluation Date). Means of terminating 
encrypted transmissions for dedicated line users could vary, determined 
by user configuration. For filers using dedicated lines terminating on 
IRS network equipment, the IRS will provide the IOS implemented 128-bit 
IPSec 3DES encryption services on the IRS equipment and provide 
configuration support for the Trading Partner equipment. IRS will 
contact each dedicated leased line Trading Partner after receiving a 
revised dedicated leased line application.

Internet Transmission Filers

    Recognizing that the majority of e-commerce and e-government 
applications are migrating to the Internet and using standard 
technologies, the Internal Revenue Service will provide the ability for 
authorized e-file Trading Partners to electronically transmit return 
information via an IRS-provided and certified secure Internet 
transport. Use of this secure Internet transport will require the use 
of Secure Sockets Layer (SSL) Version 3.0 using 128-bit encryption keys 
in an operational mode using the current modem based file transmission 
commands within a client commonly termed ``TELNET/S''. Note that EMS is 
unable to support the FTP protocol over the TELNET/S connection, but 
will continue to support Zmodem, YModem Batch, and XModem 1K. Support 
for SSL is provided at no extra cost in most Operating Systems 
available for the last five years, and is supported by the majority of 
Internet Service Providers (ISPs).

Cost Impacts and Taxpayer Burdens

    The cost impact of the Internet SSL method to IRS e-filers is 
expected to be minimal. The transmitters will incur the cost of the 
ISP, however, many of them already have and use an ISP. Currently the 
transmitters must pay for the long distance telephone call to the IRS 
front-end sites, and must make multiple calls if their transmission 
volume is high. Historic technologies also incur ``dropped'' calls. 
With use of the Internet, these occurrences should be reduced. 
Additionally, dial up access to ISPs are normally via local calls, 
including alternate phone numbers.

Implementation Schedule

    The IRS will attempt to ensure that the standards described in the 
ICD are generally compliant to those adopted by other IRS e-commerce 
Internet interfaces. The Internal Revenue Service will make a test 
facility available to its authorized e-file software developers on or 
about July 15, 2004, and have a production Assurance Testing (ATS) 
facility for authorized e-file transmitters and software developers by 
November 1, 2004.
    The Internal Revenue Service encourages all current and prospective 
transmitters to begin using the new encryption methods by November 1, 
2004. Dedicated leased line transmitters are encouraged to implement 
encryption at their earliest convenience and at a time that is mutually 
agreeable to both the trading partner and the Internal Revenue Service, 
prior to November 1, 2004.

Discontinuance of Existing Dial-Up Analog and Dial-Up ISDN Service

    Effective December 1, 2003, the Service no longer accepts requests 
for support of IRS dial-up ISDN services. During 2005, the IRS will 
phase down the number of its existing analog, PSTN dial-up line 
services and its companion existing ISDN dial-up line services. The 
service will maintain an analog dial infrastructure to use if emergency 
conditions warrant. Full dial up

[[Page 25465]]

infrastructure retirement is planned for 2006.

ADDRESSES: E-mail requests from authorized IRS e-file Software 
Developers for the Interface Control Document entitled E-FILE 
ENCRYPTION ICD to [email protected].

FOR FURTHER INFORMATION CONTACT: Questions or concerns will also be 
taken over the telephone. Call Carolyn Davis--202-283-0589 (not a toll-
free number). You may write to Carolyn E. Davis, Senior Program 
Analyst, IRS, Electronic Tax Administration, OS:CIO:I:ET:S:SP, 5000 
Ellin Road, Room C4-187, Lanham, MD 20706.

    Dated: April 28, 2004.
Jo Ann Bass,
Director Strategic Services Division, Electronic Tax Administration.
[FR Doc. 04-10361 Filed 5-5-04; 8:45 am]
BILLING CODE 4830-01-P