Electronic Filing Systems for Withholding and Employment Taxes: Recommendations and Considerations

Revenue agencies typically have only one opportunity in a decade to upgrade the core systems that will drive and define agency workload for the next ten years. In todays economic environment, no one can afford to waste resources unproductively. Given an opportunity, it is more important than ever to carefully consider design alternatives for electronic filing systems for employment tax returns and employee/payee information returns such as Forms W-2 and 1099.

Payroll service companies have worked collaboratively with state revenue agencies to improve electronic filing systems for many years. We have developed this document to provide background information and best practices for such systems. It contains consensus recommendations for agency administrators, Information Technology (IT) administrators, and system integrators and developers that will:

  • improve data quality;
  • leverage the best in new technologies;
  • increase administrative efficiencies;
  • reduce the burden to employers; and
  • improve employer customer satisfaction.

Deliberate consideration may make the difference between efficient systems, and burdening agencies, employers and service providers with substantial unproductive workload. Members of the NPRC look forward to working with each agency to develop the most appropriate electronic filing systems for employment tax reporting.