1. NACTP Filing Season Recap Areas of Interest to Industry and States FTA e-File Symposium Wednesday, May 4, 2016 Kansas City, MO

2. Panel 2 Sanford Schmidt – Intuit Contact: Sanford_Schmidt@intuit.comSanford_Schmidt@intuit.com Calvin Whitehead– TaxHawk Contact: cwhitehead@taxhawk.comcwhitehead@taxhawk.com Annette Null – H&R Block Contact: ANull@hrblock.comANull@hrblock.com Mark Castro – NACTP E-File Committee Chair/Petz Enterprises Contact: mcastro@petzent.commcastro@petzent.com

3. Topics 3 Release of Schemas and ATS Returns ATS and Business Rules Communication between States and Industry Collaboration between NACTP and States

4. MeF Schema Availability & Revisions 4 Shared Goal: Enable taxpayers and preparers to e-file their tax returns when they want, with accuracy. Two key factors driving timing and accuracy for software industry: 1.Requirements Availability 2.Subsequent Revisions

5. MeF Schema Availability & Revisions 5 Initial Individual Schema Availability: For the second consecutive year, initial schema release has been early in the update season (40 states + IRS by ATS opening). Peak time for schema releases – 9/1 - 11/1 (60% of schemas). Some as early as July, others as late as Dec.

6. MeF Schema Availability & Revisions 6 Schema Availability Best Practices: Initial schema release around Sept 1 st. Understood would mostly likely be a draft release that would be revised prior to production. Allows time for collaboration on new requirements before it’s “too late” to adjust. Leads to fewer ATS transmissions & ultimately higher quality returns. Adjust timing based on level of changes YOY.

7. MeF Schema Availability & Revisions 7 Schema Versions: 27 agencies released 2-3 schema versions (60%). Some as few as 1. Some as high as 7.

8. MeF Schema Availability & Revisions 8 Schema Revision Best Practices: Ideal range for schema versions is two to three. Single revisions tend to be released later in the year, which can impact timing and quality. Greater than three schema iterations can start causing confusion and/or churn which can also impact timing and quality. One draft version containing significant changes for processing year. This would generally be a major version bump (ie – 1.0). Followed with final version that refines elements as needed. Final versions are generally minor versions bumps (ie – 1.1) as most changes are attribute changes on existing elements. If a new version is required while in production, please allow for sufficient implementation time. Many companies are unable to make changes to production systems within approximately two weeks of a filing deadline.

9. ATS 9 Best practices and current breakdown Why consider a change? Don’t take our word for it

10. ATS – Best Practices, Current Breakdown 10

11. ATS – Best Practices, Current Breakdown 11

12. ATS – Best Practices, Current Breakdown 12

13. ATS – Best Practices, Current Breakdown 13

14. ATS – Why consider a change? 14

15. ATS – Why consider a change? 15

16. ATS – Don’t take our word for it 16 States that followed just two or three of the best practices experienced: Shorter amount of time between first submission and approval (9 days faster on average) 2.5X lower average reject rate on average Fewer number of test package resubmissions (2 less on average)

17. ATS – Don’t take our word for it 17 Kudos to these states for following 3 of the 4 best practices: Arizona California Iowa North Dakota Oregon Vermont

18. Communication Best Practices 18 Schema Testing Production

19. Communication - Schema 19 Schema change document should accompany schema release Schema changes should be announce via NACTP listserv (nactp_list.org)

20. Communication – ATS Testing 20 Test package distribution should be through NACTP listserv (nactp_list.org) Test results should be available within 24 hours of retrieval of files from IRS Agencies should send notification via listserv if there is a delay in ATS processing

21. Communication – Production States 21 Client/Industry impacting matters during start up should be reported promptly Any problems with sending acknowledgements or processing should be reported without delay Delays in distribution of refunds

22. Communication – Production Industry 22 The software partner must adhere to IRS e-file Security, Privacy and Business Standards Mandated as of January 1, 2010. The software developer must comply with the Department’s electronic schema, Software Developer Guide, and business rules. The software vendor agrees to notify the Agency of any production errors affecting the accuracy of the tax returns. An update should be provided to customers as soon as possible and within the peak tax season. Notification must be made to the Agency when resolution for the error has been made. All confidential taxpayer information must be secured.

23. Collaboration 23  NACTP Goals  To work with States to help improve the e-file process in a way that meets both the States and Industry’s needs  When NACTP wants to discuss an area of concern our goal is not to criticize. It is to understand what the State perspective is and to work towards a solution that meets the State goal in a way that industry believes helps the entire e-file process  Promote an open dialog between the States and Industry to address topics that come up in a way that promotes the partnership between industry and States  To listen to States’ concerns with industry and work to resolve them in a mutually beneficial way

24. Collaboration 24  Examples that NACTP would like to build on FTA/NACTP State Fraud Working Group IRS Security Summit FTA E-File Standards Group Interaction with States at NACTP and FTA meetings  Examples of Areas to Collaborate on NACTP State E-File Standards Requirement for Including Most or All Forms in Software Programs Tying E-File Approval and Forms Approval Together Improving the ATS process

25. Questions/Comments 25

26. Contacting NACTP Membership Where to send e-mail to inform NACTP members when there are issues or questions: To reach all members: nactp_list@nactp.orgnactp_list@nactp.org Each committee also has a specific e-mail address: For Income Tax Electronic Filing: nactp_efc@nactp.orgnactp_efc@nactp.org For Income Tax Forms: nactp_glc@nactp.orgnactp_glc@nactp.org For Sales & Use Tax: nactp_sut@nactp.orgnactp_sut@nactp.org For Payroll & Information Reporting: nactp_pirc@nactp.orgnactp_pirc@nactp.org 26