[Federal Register Volume 70, Number 162 (Tuesday, August 23, 2005)]
[Notices]
[Pages 49374-49375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4613]


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DEPARTMENT OF TREASURY

Internal Revenue Service


Discontinuance of Non-Encrypted Options for IRS E-file for the 
2006 Filing Season and Discontinuance of IRS-Provided Dial-Up and ISDN 
Lines

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final notice.

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SUMMARY: Internal Revenue Service has provided the ability for IRS e-
file program participants, who transmit directly to the Electronic 
Management System (EMS), to use only IRS approved encryption methods 
for the 2006 and later filing seasons. States that are retrieving their 
returns from the State Retrieval SubSystem (SRS) have been informed 
that they will do so via the EMS. This information pertains to IRS e-
file software developers who currently prepare software packages for 
direct dial-up transmission to IRS e-file EMS sites for individual and 
business electronic returns and electronic tax documents, for states 
participating in IRS federal/state e-file, and also for transmitters 
who have dedicated leased lines. All trading partners (transmitters) 
who directly transmit to the IRS EMS must use either the IRS Internet 
solution (described below) or they must purchase and install in IRS 
facilities Federal Information Processing Standards (FIPS)-compliant 
and IRS-approved encrypted dedicated leased lines. This solution is not 
for the Forms 1120 and 990 series submitted directly to the Modernized 
e-file (MeF) platform through the Registered User Portal or through the 
Application-to-Application method. It is not for the Information 
Returns, such as 1098, 1099, etc. to the FIRE system. It is not for the 
filing of forms W-2 to the Social Security Administration. The IRS will 
attempt to ensure that the standards described in the encryption 
solution documentation are generally compliant to those adopted by 
other IRS e-commerce Internet interfaces.

DATES: 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 shut off connections to the analog 
dial infrastructure but will maintain lines temporarily to use if 
emergency conditions warrant. Full IRS-provided dial up infrastructure 
retirement is planned for 2006. The Internal Revenue Service will allow 
testing to its authorized e-file software developers through a current 
production 2005 Assurance Testing (ATS) facility for authorized e-file 
transmitters and software developers and to its 2006 ATS. The Internal 
Revenue Service encourages all current and prospective transmitters to 
begin using the new encryption methods as soon as possible.
    Last 2005 Production/test transmissions to EMS on IRS-provided 
dial-up or ISDN lines:
     1040 family, Electronic Tax Documents, State Returns for 
Individuals, State Acknowledgments--10/20/2005.
     940, 941, 990, 1041, 1065, 1120, State Returns for 
Fiduciary Returns--12/29/05.
    First 2006 Test transmissions to EMS via encrypted transmissions, 
using either (1) Internet Secure Sockets Layer (SSL) with TELNET/S 
protocol or (2) FIPS-compliant, trading-partner provided encrypted 
dedicated leased line--11/1/05.
    Specific return test and production schedules will appear on the 
IRS e-file for tax professionals' page on the irs.gov Web site.

SUPPLEMENTARY INFORMATION: The Internet filing solution 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''. The dedicated 
line encryption options must be compliant with Federal Information 
Processing Standards (FIPS) and approved by IRS. See below for more 
information. The Internet filing solution is a replacement of the 
current dial-up transmissions to the EMS. 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.

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 enhances and completes the existing 
security provided by the trading partners' systems and by the IRS 
security zone. Many IRS trading partners are subject to the Gramm-
Leach-Bliley Act (GLBA) of 1999 and the Federal Trade Commission 
Privacy and Safeguards Rules, effective May 23, 2003. The methods the 
IRS offers in this announcement fully accommodate the requirements of 
the GLBA to encrypt the transmission of sensitive data. Encryption 
solutions began with the

[[Page 49375]]

Acceptance Testing System (ATS) in November 2004. For the 2005 filing 
season, many IRS e-file transmitters began successfully using the 
encrypted solutions, discontinuing use of non-encrypted transmissions 
whether by dedicated or dial-up links on the Public Switched Telephone 
Network (PSTN) for filers of Forms 940, 941, 1040, 1041, 1065, 
electronic tax documents, state Acknowledgment Files, and 990 family 
and 1120 family who are using the Electronic Management System.

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 has provided 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 protocols.

Dedicated Line Filers

    Based on an analysis of various e-file trading partner 
capabilities, the Internal Revenue Service began permitting the use of 
a minimum 128-bit Federal Information Processing Standards (FIPS) 
approved but trading partner-chosen, procured, and installed method of 
encryption for use on trading partner-provided dedicated line(s), 
effective for the 2005 Filing Season. These dedicated lines' 
termination points may continue to be at the Martinsburg and Memphis 
EMS locations and may continue to use the existing TELNET and FTP 
protocol methods. Transmitters may install new encrypted lines, 
including ISDN, if they are approved by IRS. IRS sent to each trading 
partner with a dedicated line a revised annual Dedicated Leased Line 
Application on which the Trading Partner must 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 termination points for encrypted transmissions for dedicated line 
users could vary, determined by user configuration. IRS will contact 
each dedicated leased line Trading Partner after receiving a revised 
dedicated leased line application. IRS is discontinuing support of 
dedicated lines' on IRS network equipment for filers of individual 
returns on November 1, 2005 and for business returns on December 30, 
2005.

Cost Impacts and Taxpayer Burdens

    The cost impact of the Internet SSL method to IRS e-filers is 
expected to be minimal. 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). 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. 
Throughput transmission times to EMS have been very fast via the 
Internet.

ADDRESSES: Authorized IRS e-file Software Developers and dedicated 
leased line transmitters who have not requested the encryption solution 
documentation, should immediately e-mail requests with the ``Doing-
Business-As'' Company name, ETIN, and EFIN to 
irs.gov">efile.transmission.encryption@irs.gov.

FOR FURTHER INFORMATION CONTACT: Questions 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:TP, 5000 Ellin Road, Room 
C4-187, Lanham, MD 20706.

    Dated: August 17, 2005.
Kim Cooper,
Acting Director, Strategic Services Division, Electronic Tax 
Administration.
[FR Doc. E5-4613 Filed 8-22-05; 8:45 am]
BILLING CODE 4830-01-P