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

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Internal Revenue Service (IRS), Treasury.


Final notice.


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.


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 Web site.

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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.


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 Start Printed Page 49375Acceptance 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.


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


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.

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Dated: August 17, 2005.

Kim Cooper,

Acting Director, Strategic Services Division, Electronic Tax Administration.

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[FR Doc. E5-4613 Filed 8-22-05; 8:45 am]