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MEMORANDUM

TO: Public Record for the NPDES Electronic Reporting Rule

EPA Docket Number EPA-HQ-OECA-2009-0274 (www.regulations.gov)

FROM: Carey A. Johnston, P.E.

USEPA/OECA/OC

DATE: 11 March 2011

SUBJECT: Meeting Notes from Meeting with IRS on Working with Third-party Commercial 

Software Providers [DCN 0041]

I. Introduction

EPA announced on July 6, 2009, that it would develop a Clean Water Action Plan to 

enhance public transparency regarding clean water enforcement performance at federal and state 

levels, to strengthen that performance, and to transform EPA’s water quality and compliance 

information systems. A consensus suggestion across co-regulators and stakeholder groups was to 

implement electronic reporting from facilities that are required to submit reports to a regulatory

agency. To fully realize the transformation of reporting and data management into the 21st 

Century, OECA is developing a rule to require NPDES permittees to provide a variety of 

environmental information electronically.

EPA is exploring different electronic reporting options to enable NPDES regulated 

facilities to electronically submit their compliance monitoring data. EPA is exploring the option 

of electronic reporting of NPDES compliance monitoring data from regulated facilities via an 

‘open platform e-file’ electronic reporting. The ‘open platform e-file’ proof of concept 

demonstration will focus the electronic transmission of NPDES (DMRs from a third-party 

commercial software provider to EPA. If EPA were to fully implement this option, any

commercial software provider that meets the Agency’s data exchange standards, protocols, and 

specifications would be able to offer electronic reporting services to the regulated community for 

the NPDES program (e.g., NPDES permitted facilities). This open platform model would likely

be similar to the Internal Revenue Service (IRS) model for electronic reporting, which uses thirdparty software providers for tax data collection and transmission (e.g., TurboTax, TaxACT) from 

private citizens and businesses. 

EPA held a teleconference with technical staff from the IRS to better understand some of 

the potential requirements on EPA and third-party commercial software providers for the open 

platform e-file option. This memorandum provides the meeting notes of this teleconference.

Attachment A provides the list of participants and questions for teleconference.
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II. Meeting Notes

 The IRS started Modernized e-File (MeF) in 2004 and the IRS is incorporating more forms 

each year into MeF. The benefits to the user are faster processing and detailed error messages 

(if there are problems with data submissions).

 The IRS uses Simple Object Access Protocol (SOAP), Extensible Markup Language (XML), 

and web services to facilitate data transfers with third-party commercial software providers.

 In order to pass data to the IRS commercial software providers must be suitable (e.g., must 

not have a criminal history). After they pass this check they must prove their competency

with data exchange services by pass a test administered by the IRS.

 The IRS test involves sample data that vendors must show that they can correctly code and 

transmit tax data to the IRS. The IRS publishes the XML schema and business rules and 

vendors must show that they can comply with both.

 The competency test usually lasts 40 to 60 days and will involve IRS staff to help decode 

error log messages. Mr. Ostro noted that a few occasion vendors have failed the competency

test and that he has had to turn them away from participation in MeF until they gain the 

necessary experience. 

 Mr. Ostro noted that software providers will be a partner in any e-File option as they sit 

between the Federal agency and the data provider. The Federal agency needs to have a good 

relationship with the software providers and there needs to be good communication between 

both parties. This includes a good error response system so that software providers can debug their software. This also includes good documentation explaining how to implement web 

services and XML for MeF.

 Mr. Ostro noted that they have a number of ways in which the IRS communicates with 

software providers. They use a website, conferences, workshops, and e-mail newsletters to 

share the latest developments with MeF.

 Mr. Ostro noted that in dealing with third-party commercial software providers there is a 

need to purchase XML firewalls to defend against security threats (e.g., SQL injection 

attacks)

 Mr. Ostro estimates that there are between 50 and 100 third-party commercial software 

providers for the IRS 1040 Form, which is one of their most popular forms. Other less 

popular forms (U.S. Corporation Income Tax Return – Form 1120) have approximately a 

dozen third-party commercial software providers.

 Mr. Ostro noted that states also share their schemas with the IRS as many state tax forms 

filed by taxpayers first go to the IRS and are then re-routed to state data systems. 
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Attachment A: List of Participants and Questions for Teleconference

EPA/IRS Teleconference

18 February 2011

Name Organization Phone Number Email

Carey Johnston EPA Office of Water 202-566-1014 johnston.carey@epa.gov

John Dombrowski EPA Office of Compliance 202-564-2290 Dombrowski.john@epa.gov

Lucy Reed EPA Office of Compliance 202-564-5036 reed.lucy@epa.gov

Rochele Kadish EPA Office of Compliance 202-564-3106 kadish.rochele@epa.gov

Alison Kittle EPA Office of Compliance 202-564-6233 kittle.alison@epa.gov

Roy Chaudet EPA Office of Environmental Information 202-566-1703 chaudet.roy@epa.gov

Tobias Schroeder EPA Office of Environmental Information 202-250-8603 Schroeder.tobias@epa.gov

Xan Ostro Internal Revenue Service 202-283-7697 xan.h.ostro@irs.gov

List of Questions for Teleconference

 What mechanism(s) do you use to generate interest among vendors for participating in the IRS's electronic reporting system?

 How do you ensure open competition among vendors?

 How do you vet potential third-party software vendors when considering their potential for tying into the IRS electronic reporting 

system? What criteria did you use to evaluate whether the interested vendors were qualified to meet the goals of the project?

 How do you communicate with the vendors (e.g., individually, as a group, web -

http://www.irs.gov/taxpros/providers/article/0,,id=101145,00.html )?

 What number of IRS FTE and other resources are dedicated to working with third-party software vendors to ensure proper 

communication?

 If a vendor required considerable more hand holding than others, how do you handle this situation (e.g., gave them what they 

needed, disqualified them as eligible)?

 What criteria do you use for testing and how many failures do you allow before disqualification of a third-party software vendor?

 What is the time frame for bringing a new vendor into the IRS's electronic reporting system?

 What is the approximately number and type of vendors that provide electronic reporting services to tax filers?

 What is the number of electronic tax submissions each year and the amount of data exchanged?

 Is the following document the best resources to get an overall big picture on how the IRS works with third-party software vendors?

 Modernized e-File (MeF) Guide for Software Developers And Transmitters (Publication 4164, Revision 10/2010)