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 third-party 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.

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 de-bug 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. 

        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)
