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### MEMORA **NDUM** 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 T hird - part y C ommercial

S oftware P rovider s [ 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 sy stems. A consensus suggestion across co - regulators and stakeholder groups was to implement electron ic 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 variet y 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 NPD ES 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 - part y 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 third party software providers for tax data collection and transmiss ion (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 - part y commercial software providers for the open platf orm e - file option. This memorandum provides the meeting notes of this teleconference. Attachment A provides the l ist of p articipants and questions for t eleconference .Page 2

**I I.**  **Meeting Notes**

 The IRS started Modernized e - File (MeF) in 2004 and the IRS is incorporating more forms each ye ar 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 - part y 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 b y pass a test administered by the IRS.

 The IRS test involves sample data that vendors must show that they can correctl y code and transmit tax data to the IRS. The IRS publ ishes the XML schema and business rules and vendors must show that they can comply

with both.

 The competency

test usually

lasts 40 to 60 day s and will involve IRS staff to help decode error log m essages. Mr. Ostro noted that a few occasion vendors have fa iled 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 an y e - File option as they s i t 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 sy stem so that software providers can de bug their softwar e. This also includes good documentation explaining how to implement web services and XML for MeF.

 Mr. Ostro noted that they have a number of way s in which the IRS communicates with software providers. They use a website, conferences, workshops, and e - mai l newsletters to share the latest developments with MeF.

 Mr. Ostro noted that in dealing with third - part y commercial software providers there is a need to purchase XML firewalls to defend against securit y threats (e.g., SQL injection attacks)

 Mr. Ostro e stimates that there are between 50 and 100 third - part y 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 s ys tems.Page 3 **Attachment A:** List of Participants and Questions for Teleconference

EPA/ IR S 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 D ombrowski .john@epa.gov Luc y R eed EPA Office of Compliance 202 - 564 - 5036 reed.lucy @epa.gov Rochele Kadish EPA Office of Compliance 202 - 564 - 3106 k adish .rochele@epa.gov Alison Kittle EPA Office of Compliance 202 - 564 - 6233 kittle.alison@epa.gov Roy Chaude t EPA Office of Environmental Information 202 - 566 - 1703 chaudet.ro y@ epa.gov Tobias Schroeder EPA Office of Environmental Information 202 - 250 - 86 03 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 s ys tem?  How do you ensure open competition among vendors?  How do you vet potential third - part y software vendors when considering their potential for tyi ng into the IRS electronic reporting sy stem? 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 o ther resources are dedicated to working with third - part y 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 man y failures do you allow before disqualification of a third - part y software vendor?  What is the time frame for bringing a new vendor into the IRS's electronic reporting s ys tem?  What is the approximately number and t ype of vendors that provide electronic reporting services to tax filers?  What is the number of electronic tax submissions each ye ar and the amount of data exchanged?  Is the following document the best resources to get an overall b ig picture on how the IRS works with third - party software vendors?  Modernized e - File (MeF) Guide for Software Developers And Transmitters (Publ ication 4164, Revision 10/2010)