E-Filing Should Be An E-Government Service

That was only magnified for TurboTax customers who received an error message when they tried to file the last few days before the April 17 deadline. Apparently, the tax software developer, Intuit, received twice as many returns compared to last year, which caused a system overload. The government gave impacted customers a two-day extension, and Intuit agreed to pay any penalty fees that result from late filing, but the situation leaves a pretty noticeable mark on the company that helped drive more than half of taxpayers to file electronically this year.

To me, this is not a lesson learned for a commercial software developer as much as a clear message sent to government. Why, when online citizen services are such a priority across federal agencies, doesn't the Internal Revenue Service offer its own end-to-end electronic filing capabilities? Electronic tax filing is the perfect example of a service that is best served through an e-government initiative that can combine the capabilities not only of a software developer, but also channel companies that understand what it means to serve both the government agency and its constituents.

Intuit and other companies like it are raking in millions of dollars (according to the Washington Post, taxpayers paid more than $1 billion in fees to companies to file taxes electronically in 2006). What they should be doing, instead, is providing their software applications as part of bids for a contract with the IRS. Systems integrators would treat this like any other federal procurement, responding to a request for proposal with a solution that integrates tax filing software into the agency's own systems, incorporating other applications (CRM, portals, and so on) and necessary storage and security capabilities. Another alternative would be for the whole initiative to be outsourced to a qualified team, saving the IRS from devoting internal staff and resources to management and support.

Once implemented, citizens would file their taxes on the Web site. Any charges applied to the service would be used to offset the cost of the procurement -- not to line corporate pockets.