The Internal Revenue Service will enhance its new taxpayer database to handle select exceptions in the simplest tax returns, officials said recently.
In July, IRS will add a capability for the Customer Account Data Engine to process returns for filers who changed their address during the year. The agency will roll out the new functionality for the next filing season in 2006, said Rick Skorny, IRS deputy associate CIO for program management.
To date, CADE has processed more than 1.2 million 1040EZ forms from single filers who do not owe tax. IRS anticipates that number to reach about 2 million by the end of tax season in late summer.
Launched last summer, the relational database will replace the 1960s-era tape-based Master File. CADE will process about 4 million forms in 2006, IRS has said.
IRS is also scaling CADE to handle filings based on filing status as well as tax form. In July 2006, IRS will add to the system the capability to process 1040EZ returns for filers who are married and filing jointly, for use in 2007. That upgrade will enable CADE to process and retain forms for about 4 million filers who fit the categories. Eventually CADE will also process returns for single taxpayers who use the 1040 or 1040A forms with no itemized deductions and no balance due.
Automating the tax process is saving both taxpayers and IRS time and money. Taxpayers who e-file and whose returns are processed using the legacy Master File can see their refund in as little as two weeks if they direct deposit.
“CADE is drained daily, so it can process a refund with direct deposit in as little as three days,” Skorny told an industry conference sponsored by the Council for Electronic Revenue Communication Advancement.
CADE has so far issued $340 million in refunds. Use of tax preparation software by consumers and professionals has cut the error rate among filers by two-thirds, Skorny said.
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