Attachment 1 - PWS_IRS JETCS Tax Calc.pdf

Performance Work Statement (PWS) Joint Enterprise Tax Calculation Solution (JETCS)

1. PROJECT TITLE

Joint Enterprise Tax Calculator Solution (JETCS)

2. BACKGROUND

In August 2022, Congress enacted the Inflation Reduction Act (IRA), which has had a significant impact on the Department of Treasury Internal Revenue Service (IRS) and its ability to serve the public. This act provides the IRS with a historic opportunity to transform the administration of the tax system and improve the services provided to taxpayers. The IRA aims to address the tax gap and ensure the fairness of the tax system. It provides long-term funding to the IRS allowing for technological upgrades, retiring of outdated legacy Information Technology (IT) systems, and investments in new technology to enable real-time data and analytics to improve customer experience and drive productivity.

Aligned with the published IRS Strategic Operating Plan (IRS SOP), the IRS has adopted an IRA Integrated Roadmap that outlines how the IRS will better serve taxpayers, tax professionals, and the broader tax ecosystem.”1 The Roadmap projects pathways to achieving key outcomes including providing IRS employees with the hardware, software, and supplies needed to deliver effective and efficient results to taxpayers. To support this outcome which connects to retiring outdated technology, the IRS is interested in Commercial Off the Shelf (COTS) tax calculator solution due to its potential to replace widespread IRS use of specialized tax calculators.

The Internal Revenue Service (IRS) utilizes a diverse array of calculators tailored to perform specific tax-related calculations. These tools are essential for audits of tax returns, collections of taxes or fees, and allocations of assets across various tax categories, such as individual returns, business returns, and estate or gift tax returns. The calculators range from Commercial Off-The- Shelf (COTS) software and products customized for integration with existing IRS systems, to internally developed applications and PDF forms and Excel workbooks for complex calculations.

The objective is, a COTS cloud-based, single-tenant Software as a Service (SaaS) tax calculation solution that not only aligns with IRS’s stringent security protocols, including cybersecurity, Federal Risk and Authorization Management Program (FedRAMP), and privacy standards but also seamlessly integrates with the IRS systems. This solution is anticipated to support a high-volume, multi-user environment catering to both manual and automated IRS workflows.

The tax calculator solution:

• Must be federally compliant SaaS or deployable on IRS infrastructure.

• Can be one or more products that is explicitly for the computation of tax, interest, and penalties based on data provided.

• Integrates with an optional vendor middleware.

• Must be able to map IRS provided dataset to vendor software to perform the calculations.

• Support a high-volume, multi-user environment catering to both manual and automated IRS workflows.

• The solution will support a 10-year rolling tax window including current tax year, including single-year, multi-year, and associated multi-form/schedule tax computations for correcting tax.

• Adhering to IRS's performance benchmarks, including peak load expectations and 99 percent uptime target and meet a maximum API response time of 10 seconds.

• Should have a user interface to view and edit returns.

JETCS objective is to obtain tested, innovative tax calculator solution to integrate into IRS workflows and fulfilling complex computational needs.

3. PURPOSE

The tax calculation solution will integrate (i.e., interface or exchange information) with one or more systems in the IRS IT ecosystem. A primary use case for the tax calculator solution involves integration with the cloud-based IRS Enterprise Case Management (ECM) solution. The tax calculator solution will provide computations to support examiners. The tax calculator solution will receive IRS tax return data directly from the middleware to perform automated tax calculations based on tax return line-item data. The solution will perform an automated final single-year, multi-year and associated multi-form/schedule tax computation for the corrected tax, penalties, and interest based on adjustments made to the individual or business account for a given tax year(s).

IRS seeks a vendor that possesses fully tested, innovative, scalable tax calculator service for IRS-wide use with the ability to integrate and perform a full range of tax computation requests from single-user workflows to batch calculation requests to highly complex tax calculations. Results expected are a fully integrated tax calculation solution with IRS workflows that can fulfill IRS examiners’ complex computational needs.

Included in scope the IRS expects the tax calculator solution to be maintained by the Contractor such that it will be updated in a timely manner and adjusted as needed to the evolving needs of the IRS and changes in tax laws.

Furthermore, the IRS seeks to engage a vendor with a strong understanding of complex tax rules, regulatory requirements, and their practical application within automated calculation environments to ensure accuracy, compliance, and seamless system interoperability. This expertise is vital for adapting the COTS product to meet the specific needs of IRS examination workflows and to support future expansions, including large batch uploads for processing millions of returns. The vendor's responsibilities will extend to maintaining the solution in alignment with evolving IRS needs and tax law changes, thereby supporting the IRS Modernization objective to eventually consolidate various tax calculators into a single, efficient calculator. This initiative not only aims to fulfill immediate operational requirements but also positions the IRS to adapt swiftly to future tax calculation needs and legislative changes, ensuring sustained compliance and service excellence.

4. SCOPE OF WORK AND DESCRIPTION OF TASKS

The scope of this procurement includes the tax calculation capabilities to support 1040, 1120, 1065 and other priority workflows. The contractor shall maintain the 1040 Tax Application for a 10-year rolling tax window including current tax year, incorporate updates from new tax regulations, and provide enterprise-wide application programming interface (API) licensing. The solution must ensure continuous vulnerability management and security compliance to obtain and maintain Authority to Operate, implement legislative updates as required, meet a maximum API response time of 10 seconds. This solution is essential to automating and improving the accuracy of IRS tax calculations and enhancing operational efficiency.

Calculations for Forms: The solution will provide calculators for 1040 series, including all related forms, schedules, worksheets, and calculations triggered by interdependencies among these forms. In addition, forms deemed priority by the business including but not limited to the following workflows: 1040, 1041, 1065, 1120, 1120-S including associated forms, schedules and worksheets, and calculations triggered by interdependencies among these forms will be needed. The number of covered forms, schedules, and worksheets will expand as the IRS determines additional forms to be migrated into the solution.

Calculations for Tax Years: The solution will support tax calculations for a 10-year rolling tax window through current year, facilitating advanced features and all tax years eligible for carryback and carryforward. The number of tax years covered will expand as the IRS determines additional forms, schedules, and worksheets to be migrated into the solution. The tax calculator solution will provide carryback and carry forward between forms/schedules across years without warranting the consuming application to provide the data (without multiple passes). For all eligible tax years, update and maintain the tax calculator solution to ensure ongoing adherence to annually indexed tax parameters as well as the Internal Revenue

Code, Treasury Regulations, legislative changes, new and/or modified IRS forms, schedules, and business needs.

Seamless Integration: A key requirement is the solution’s capability to integrate flawlessly with IRS systems through open, efficient APIs.

4.1 Task 1: Orientation Briefing

Within two weeks of task order award, the Contractor shall conduct an orientation briefing for the Government. The Government does not desire an elaborate orientation briefing, nor does it expect the Contractor to expend significant resources in preparation for this briefing. Rather, the intent of the briefing is to initiate the communication process between the Government and Contractor by introducing key task order participants, explaining their roles, reviewing communication ground rules, and assuring a common understanding of task order requirements and objectives.

The orientation briefing shall be held at the Government's facility and both parties shall mutually agree upon the date and time.

The completion of this briefing shall result in the following:

a) Initiate communications between the Government and Contractor and assure a common understanding of task order requirements, objectives, and expectations. Delivery of required Orientation Briefing materials and briefing minutes to the Contracting Officer’s Representative (COR) after the briefing.

b) The Contractor and Government personnel who will perform work under this task order will be introduced.

c) The Government will show the applicable facilities to the Contractor if the Contractor will be performing work on the Government's site.

d) The Government may provide any Government-Furnished Property (GFP) to the Contractor at this time.

e) Any issues concerning the Contractor clearances for Contractor personnel will be discussed.

f) The Contractor shall demonstrate confirmation of their understanding of the work to be accomplished under this Task Order PWS.

g) The Contractor shall provide the accounting period end dates to be used for the term of this task order.

h) The Contractor shall provide a list of Key Personnel (See C.5.1.1).

i) The contractor shall take minutes during the orientation meeting and document the key points of discussion, action items and who will perform them as well as who was in attendance.

DESIRED OUTCOME: Initiate the communication process between the Government and contractor and assure a common understanding of the task order requirements, objectives, and expectations; delivery of required Orientation Briefing materials and Briefing minutes to the COR after the Briefing

4.2 Task 2: System Integration and Performance

Integration Support The Contractor shall ensure seamless integration of calculation services into JIOS workflows and support all required testing and validation activities.

Accuracy of Calculations The Contractor shall ensure that all calculation results transmitted to the calling application are accurate and consistent with applicable tax rules and business logic.

Performance Requirements When complex calculations are initiated from JIOS as part of customer workflows, the Contractor shall ensure:

• Calculation accuracy meets 100% compliance with approved tax computation logic.

• Response times meet established performance thresholds (e.g., within 10 seconds per transaction, as defined by the Government).

DESIRED OUTCOME: The desired outcome of this effort is the continued availability and reliable performance of the COTS Tax Calculator service to support JIOS workflows and other IRS systems. The service shall deliver accurate and timely tax calculations, seamlessly integrate into customer workflows, and ensure calculation results are transmitted correctly to calling applications. The Contractor shall maintain required performance standards, accuracy, and system reliability necessary to support the successful closure of audits.

4.3 Task 3: Operational and Maintenance (O&M) Objectives

• Perform ongoing update and maintenance of the tax calculator solution to ensure it remains in line with annually indexed tax parameters, the IRC, Treasury Regulations, and specific IRS needs.

• Promptly incorporate annual and ad-hoc legislative changes and full support for testing related to full functionality, data and calculation accuracy, compliance, and performance requirements.

• In the event of an outage, participate in triage and resolution efforts, adhering to the IRS's service level agreements. The vendor shall have a production support team available on weekdays from 6am to 8pm Eastern Time.

• The vendor will be expected to actively engage with the IRS technical team within the timeframe specified below to facilitate service restoration and will escalate issues as needed to deliver qualified technical support during such incidents.

• Priority 1 (Critical): within 8 hours

• Priority 2 (High): within 16 hours IR

• Priority 3 (Medium): within 5 business days

• Priority 4 (Low): within 10 business days

• Priority 5 (Very Low): within 14 calendar days

• Notify the IRS of all planned data changes to provide at least 48 hours advance notice of code changes impacting JIOS to ensure data mapping to IRS systems can be completed on time.

• Integrate fully tested and validated annual legislative updates by the second week of January in support of annual filing season of each year and implement ad-hoc legislative changes within 30 days of their enactment or as agreed by the IRS or within 30 days of IRS publication of final forms if final forms are not available by that date.

• Plan and effectively execute timely updates and adjustments in response to evolving IRS needs and tax law changes.

• Provide plans and timelines for any required updates, whether vendor-led or in collaboration with the IRS.

• Set up and provide tools and processes for continuous monitoring and reporting on system performance, integration status, and compliance with IRS standards.

DESIRED OUTCOME: Ensure the COTS Tax Calculator service remains accurate, compliant with legislative changes, and fully operational. Required updates shall be implemented within established timelines, with continuous monitoring and enhancements to maintain performance, reliability, and alignment with IRS operational needs.

4.4 Task 4: Security and Compliance Objectives

• Compliance with IRS Standards: Ensure all development, enhancement, and maintenance activities comply with IRS security standards, including data protection, encryption, and access controls.

• Adhere to federal guidelines, such as NIST, FISMA, and FIPS standards.

• Maintain robust data security and integrity for all transactions and data exchanges, implement necessary security patches and updates, and focus on maintaining integration integrity with ECM and JIOS.

• Participation in Security Assessments: Engage in the Annual Security Controls Assessment to help identify, mitigate, and address security risks, supporting the IRS in upholding a strong security posture essential for the protection of taxpayer data

DESIRED OUTCOME: Ensure all development, enhancement, and maintenance activities comply with IRS security standards, including data protection, encryption, and access controls. Adhere to federal guidelines such as NIST, FISMA, and FIPS standards.

4.5 Task 5: Calculation Software & Licensing and Support

4.5.1 APIs

• API-enabled The vendor shall provide APIs and documentation for the Calculator solution to ingest data, calculate the taxes and return calculation results and supporting schedules to the calling program. Ensure that all calculations needed for 1041, 1065, 706, 1120, and 1120-S, and other workflows identified by the business are API-enabled.

• API-licensing The vendor shall provide full API licensing with IRS systems so any IRS application can utilize the calculations via JIOS.

DESIRED OUTCOME: Provide an IRS Service-wide license for the APIs to enable calculation services to be incorporated into JIOS and accessed by any IRS system as required.

4.5.2 Tax Calculations

The comprehensive tax calculation solution should continue delivery and expansion of solution tailored for the Form 1040 (U.S. Individual Income Tax Return) series, alongside all related forms, schedules, and worksheets. This solution must adeptly handle calculations that account for the complex interdependence among these components, ensuring accuracy and efficiency. Full UI organizer and tax form functions including embedded rendering capabilities within IRS custom-built solutions

DESIRED OUTCOME: Shall perform tax calculations in accordance with the tax law

4.5.3 Installation, Integration and Compliance Support

The vendor shall:

o Support the installation of a COTS, cloud-based, single-tenant SaaS tax calculator solution supporting 1040 workflows on IRS designated infrastructure o Support the continued integration of the COTS Calculation solution with JIOS to support all workflows prioritized by the business.

o Provide relevant information and complete necessary documentation to maintain the IRS ATO and certification.

o Ensure that the installation and testing of the provided Calculation solution adhere to all relevant IRS security protocols (Section 6, Deliverable 14).

DESIRED OUTCOME: Provide support for installation, integration, testing and requirements to ensure IRS ATO and certification

5. DELIVERABLES AND SCHEDULE

The Contractor shall deliver the following Work Products:

Table 1. JETCS Key Deliverables

# Deliverable / Work Product

Objective Transmission Method

Proposed Project Plan

Defines the responsibilities, timeline, risks, and milestones of contract objectives.

Email and/or presentatio n

Monthly Status Report

Provides a regular accounting of project activities described in the Project Plan, implementation risk, and mitigation strategies.

Email and/or presentatio n

Quality Assurance Surveillance Plan (QASP)

Describes the methods used to monitor Contractor performance and evaluate whether the Contractor meets the quality levels identified in the Performance Work Statement (PWS) and the Contractor’s Quality Control Plan (QCP).

Quality Control Plan

(QCP)

Describes all quality control procedures the Contractor will utilize to measure, track, and report their adherence to contract performance requirements.

Monthly Deliverable Report

Outlines the work performed during each reporting period aligned with the services invoiced for the same reporting period.

# Deliverable / Work Product

Objective Transmission Method

Contractor’s Work Breakdown Structure

(CWBS)

Fully defines the hierarchical (three-level) decomposition of discrete, outcome-based, work packages associated with the Contractor’s proposed solution. The CWBS shall include a draft CWBS Dictionary that includes descriptions of work and shall reference Capability Name, deliverable and/or work products, and the estimated duration of task activities. The CWBS shall map to the Contractor’s PWS. The CWBS shall provide the basis for all management interactions between the Contractor and the Government; ensure agreement on scope, schedule, and cost; and serve as the basis for Contractor accountability and reporting.

6. Work Product Quality Measures

The general quality measures below will be applied to each work product received from the contractor under the resulting contract. The work product will comply with all applicable standards and directives from the enclosed References tables.

• Accuracy - work products shall be accurate in presentation, technical content, and adherence to accepted elements of style.

• Clarity - work products shall be clear and concise; technical terms shall be used, as appropriate. All diagrams shall be easy to understand and relevant to the supporting narrative.

• Specifications Validity - All work products must satisfy the requirements of the Government as specified within the PWS task and any technical parameters.

• Format - work products shall be submitted in hard copy (where applicable) and in any media format defined in the contract PWS. Hard copy formats shall follow Department of the Treasury and IRS Directives and shall be consistent with other similar efforts. All text and diagrammatic files should be editable by the Government.

• Timeliness - work products shall be submitted on or before the due date specified in the task order, or submitted in accordance with a later, scheduled date agreed to by the CO.

7. PERFORMANCE

7.1 Place of Performance

The Contractor will work at Contractor facilities, remote, and onsite at various IRS locations. Requests from the Contractor to work remotely will be evaluated and approved by the IRS. Approval of such requests would be at no cost to the government. Site visits to IRS locations or other locations may be required to meet with Contractors, system developers and administrators, operations personnel, and IRS staff.

The Contractor must coordinate site visits to IRS facilities with the Government Task Manager (GTM) and COR and must abide by Department of the Treasury Directive (TD) 71-10 regarding provisions for authorized entrance and exit at these facilities. When working at a government facility, Contractor employees are required to wear identification badges. Local travel (within 50-mile radius of Washington, DC, or any IRS field offices) required for on-site meetings will not be reimbursed by the IRS. The Contractor must provide the COR, GTM, and other IRS staff as appropriate with advanced notice to make necessary arrangements.

The Contractor shall provide a travel voucher statement for all local travel. The voucher will ensure verification of costs incurred for local travel under the contract is both allowable and reasonable and in accordance with FAR

31.205.46. The Contractor shall attach the voucher and receipts to the monthly invoice. For any trip to be authorized, the COR must approve such travel in advance and in writing. Failure to acquire pre-approval may result in non-local travel charges by the Contractor being denied.

7.2 Period of Performance

The period of performance for any resultant award will include a 12-month base period and four

(4) 12-month option periods. An additional six-month extension under FAR 52.217-8, Option to Extend Services, is possible.

8. TRAVEL

The contractor will work at contractor facilities, virtually, or onsite at various IRS locations. Requests by the contractor to work remotely will be evaluated and approved by the IRS Government Lead. Approval of such requests would be at no cost to the government. Site visits to IRS locations or other locations may be required to meet with contractors, system developers and administrators, operations personnel, and IRS staff. Space may be an issue at the Government site location and may not be available at award. Contractor staff will travel to Government’s site for face-to-face meetings with end users, meetings with IRS management and employees as needed for the project support.

9. GOVERNMENT FURNISHED PROPERTY (GFP)

The below Government Furnished Property (GFP) will be provided to the Contractor.

Additional materials, to include equipment and/or information, may be provided should it become necessary for the execution of the contract.

ITEMS QUANTITY

Contractor Identification Badge/Smart ID Card TBD

Laptops with Local Area Network Access TBD

Microsoft: Word, Excel, PowerPoint, Project Access TBD

Upon completion of any resultant contract/order, disposition of GFP shall be in accordance with FAR 52.245-1.

All Contractor employees who are provided an IRS laptop or similar equipment are required to fully utilize the government furnished equipment (GFE) and conduct all official IRS business on the IRS issued laptop. Government furnished information (GFI) can only be maintained on GFE. Contractors shall not conduct any IRS business and related tasks on their corporate or personal computers. IRS information will not be sent to a contractor’s corporate or personal email. This includes removable media, such as thumb drives.

At the written request of the Government, the Contractor will immediately return any property provided by the Government for Contractor’s use and completion of assigned tasks. If not requested, Contractor will continue to abide by FAR Part 45 until completion of the contract.

10. GOVERNMENT-FURNISHED INFORMATION (GFI)

GFI (to include manuals, notes, memos, instruction materials and other information) may be provided in the performance of this award.

Upon completion of any resultant GSA order, disposition of GFI shall be in accordance with FAR 52.245-5.

APPENDIX A: ACRONYMS

Acronym Definition

API Application Programming Interface

BBA Bipartisan Budget Act

CO Contracting Officer

COR Contracting Officer Representative

COTS Commercial Off the Shelf

CWBS Contractor’s Work Breakdown Structure

ECM Enterprise Case Management

ECMO Enterprise Case Management Office

ELC Enterprise Life Cycle

FAR Federal Acquisition Regulation

FedRAMP Federal Risk and Authorization Management Program

FIPS Federal Information Processing Standards

GFI Government Furnished Information

GFP Government Furnished Property

GSA General Services Administration

GTM Government Task Manager

IRA Inflation Reduction Act

IRM Internal Revenue Manual

IRS Internal Revenue Service

IRS SOP IRS Strategic Operating Plan

IT Information Technology

ITAD Information Technology Applications Development

JETCS Joint Enterprise Tax Calculator Solution

JSON JavaScript Object Notation

MeF Modernized e-File

MMR Minimum Mandatory Requirements

NIST National Institute of Standards and Technology

O&M Operations & Maintenance

OneSDLC One Solution Development Life Cycle

PWS Performance Work Statement

QASP Quality Assurance Surveillance Plan

QCP Quality Control Plan

RAR Revenue Agent Report

SLL Separate Limitation Loss

SOO Statement of Objectives

TD Treasury Directive

TEFRA Tax Equity and Fiscal Responsibility Act of 1982

UI User Interface

XML Extensible Markup Language

APPENDIX B: GLOSSARY

Terminology Definition Source

Automated Descriptor of a system or process that can operate without human intervention by means of technology that uses programmed commands combined, specifically at the IRS to import or export data into a calculator system.

Britannica, IRS documentation

Batch A specific group of like documents; The tax calculator works with batches of tax returns.

Internal Revenue Manuals, Part 3, Chapter 10, Section 73

- Batching and Numbering

Carryback A deduction or credit that can be applied or “carried” to offset tax or taxable income in a preceding taxable year. Taxpayers eligible for carrybacks: Individuals, Estates, Trusts, Corporations, Charitable and Exempt Organizations

IRS Internal Revenue Manuals, Section 21.9

Carry Forward A deduction or credit that can be applied or "carried" to offset tax or taxable income in a succeeding taxable year. Taxpayers eligible for carry forwards: Individuals, Estates, Trusts, Corporations, Charitable and Exempt Organizations.

IRS Tax Topics, Topic No. 409, Capital Gains and Losses

Enterprise The IRS ecosystem of core mission functions that directly relate to front-line tax administration, including IRS Business Domains, Service Domains, and Technical Services Domains.

Internal Revenue Manuals, Part 2, Chapter 15, Section 1 - Enterprise Architecture Overview

Middleware Software that enables one or more kinds of communication or connectivity between applications or application components in a distributed network. In IRS terms, middleware is envisioned to connect and move data between a tax calculator solution and applications at the IRS. See definition within Section 2 – Background.

IBM, IRS architecture discussions

Pass-through Calculation

The process of determining the corrected income, deductions, credits, and other tax items of a pass-through entity, such as a partnership, S corporation, or Fiduciary (Trust) return and calculates the allocable amounts for those items attributable to the investor returns for non-BBA cases.

This is done because pass-through entities themselves are not subject to income tax.

Instead, their income, deductions, credits, etc., are allocated among the owners or members, who then report these items on their tax returns and pay any tax due at their tax rates (if applicable). For Bipartisan Budget Act (BBA) cases, imputed calculations are made at the entity level.

Original definition. Developed for the JETCS procurement through IRS stakeholder input.

Processing The series of actions or steps taken to transform raw data or materials into a finished product or result.

Actions or steps may be performed manually or assisted by a computer (e.g., via a software program). For the purposes of the JETCS procurement, the tax calculator solution will perform the steps required to produce one or more computations required by IRS examiners complete audit workflows for tax returns, collections of taxes or fees, and asset allocations (e.g., individual returns, business returns, estate, gift tax returns, etc.).

Original definition. Developed for the JETCS procurement through IRS stakeholder input.

Statutory Adjustment

The process of accounting for changes made to line items on a taxpayer's return based on the applicable provisions of tax laws or statutes. Statutory Adjustments occur when a calculation used in a return is adjusted automatically impacting one or more other calculations and changes to resulting line-item values.

Original definition. Developed for the JETCS procurement through IRS stakeholder input.

Supplemental Calculation

A computation specific to IRS exam processes that may not normally be performed by a COTS product and therefore may require customization by the Contractor (e.g., calculations that are detailed and included in a Revenue Agent Report (RAR).

Original definition. Developed for the JETCS procurement through IRS stakeholder input.

For example, refer to F4549 (see IRM 4.10.8.2.2.1) and F5701 (See IRM 4.46.4.11).

APPENDIX C: JETCS TARGET STATE CAPABLITIES

Category – Business Logic and User Interface

Capability Name Description

Interface: Miscellaneous Business logic and user interface aspects related to miscellaneous tax computations (e.g., custom rates tables, “what if” scenario creation and comparison, etc.).

Interface: Pass-through Tax Business logic and user interface aspects related to pass- through tax computations.

Interface: Variance Analysis Business logic and user interface aspects related to variance analysis computations.

User Experience General UI screens and field requirements and standards across all tax computation functionality.

Tax Law System Updates Maintenance of tax computation rules in response to legislative changes annually and on-demand as required.

Tax Help and Tutorials Searchable help screens with reference to the tax laws, regulations, and citations associated with the tax adjustment and calculation.

Category – Calculations

Calculation: Form 1040 Tax Tax computations on the IRS Form 1040 and all related IRS forms, schedules, and worksheets, for multiple years.

Calculation: Carryback and Carryforward

Tax computations related to provisions that allow operating losses, capital losses, and credits to be used as a tax shield to reduce taxable income in prior and future years.

Calculation: Form 1120 Tax Tax computations on the IRS Form 1120, 1120-S and all related IRS forms, schedules, and worksheets, for multiple years.

Calculation: Form 1065 Tax Tax computations on the IRS forms 1065 and all related IRS forms, schedules, and worksheets, for multiple years.

Calculation: Form 1041 Tax Tax computations on the IRS Form 1041 and all related IRS forms, schedules, and worksheets, for multiple years.

Calculation: Pass-through Tax

Tax computations for taxes of applicable types of business entities being paid on the business profits in their owner's personal tax return forms.

Calculation: Interest Computations of various types of interest on tax amounts.

Calculation: Penalty Computations of various types of penalties on tax amounts. There are over 200 penalty types in the tax code. The 5 most used types, which are estimated to cover 95% of the 200 types, are:

1. Estimated Tax

2. Failure to Deposit

3. Failure to Pay/ Failure to File

4. Accuracy

5. Civil Fraud

Calculation: Miscellaneous Tax computations related to specific tax aspects or provisions of importance to the business not covered by other calculation categories (e.g., large dollar computations, US and Foreign Source Income, Foreign Tax Credit Limitation to encompass all aspects of FTC.)

Calculation:

Statutory Adjustments

Calculations supporting accounting for changes made to line items on a taxpayer's return based on the applicable provisions of tax laws or statutes. Statutory Adjustments occur when a calculation used in a return is adjusted automatically impacting one or more other calculations and changes to resulting line-item values.

Calculation:

Imputed Underpayments

Flow-through computations covered by either the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) or the Bipartisan Budget Act of 2015 (BBA).

Category – Integration

Application Integration Integration between the tax calculator solution and IRS systems and applications using standard-based APIs.

Data Integration Ability to interface with the IRS data systems using standard data formats.

Calculation API Support API support for tax calculations specified in the Calculation capabilities.

Integration Integration between the tax calculator solution and the IRS middleware with support for business workflows and the division of responsibilities for calculations, UI, and reports.

Category – Reporting & Analysis

Tax Calculator Reporting Supplemental tax calculations supporting generation and rendering of the internal IRS forms and report (i.e., F5701, F4549 RAR).

Category – System

System Security and Privacy

IRS security policy compliance and adherence to federal security directives on authentication, authorization, data protection, and auditing.

System Performance Support for required volumes of tax computations, numbers of end users, and response times.

System Offline Calculations Support for offline and disconnected use functionality for specific IRS use cases including the examination process for sensitive tax returns and grand jury inquiries for which no data must be stored within the case management or tax calculation system.

System Automation Support for automated and batch processing of tax calculations.

System Accessibility/508 Conformance to Section 508 accessibility requirements.

User Management Ability to manage users, roles, and groups with associated permissions, capabilities, features, and functions.

Operations and Maintenance

All aspects of system operations and maintenance according to IRS schedules include patching and updates, outage management and escalation, trouble ticket management, and health logging.

Implementation Solution development and integration into the IRS environments according to IRS standards, including code change management, continuous delivery and monitoring, and documentation.

Testing Ability to support integration testing within the IRS environments, including support for agile development and testing, and rollout of capabilities and features in multiple increments.

APPENDIX D: EXAMPLES OF IRS STATUTORY ADJUSTMENT CALCULATIONS

Statutory Issue Name

Statutory-Itemized Deductions (Medical)

Statutory-Itemized Deductions (2% Misc)

Statutory-Itemized Deduction

Statutory-Foreign Tax Credit

Statutory-Self Employment (SE) Tax

Statutory-Alt Min Tax

Statutory-Earned Income Credit

Statutory-Standard Deduction

Statutory-Residential Energy Credit

Statutory-Qualified Business Income Deduction