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Research Outline

Prepared for Otniel A. | Delivered June 9, 2021

Tax Authorities APIs Benchmark

Goals

To provide a benchmark for the Application Programming Interfaces (APIs) of the tax authorities in various countries including, the US, the UK, Canada, Australia, and Scandinavian countries, which are used by third party applications to offer e-filing services on behalf of legal entities, such as the citizens and companies. This goal will be achieved by addressing the following:
  • The actions available via the API
  • The year/date of the API's launch
  • Its use, including the types of applications used, such as mobile apps for freelancers and enterprise accounting software
  • The demographic analysis of its key users, for instance, accountants of Small to medium businesses or payment/fintech apps
  • The approval process for apps using the API, for instance, whether there is a clear and public due diligence process
  • The availability of a policy/license agreement specifying the legal responsibilities of the service provider using this API
  • The number of annual apps and/or users of the service
  • The general sentiment and satisfaction from the service
  • The authentication process, for instance, the use of a central government identification system, or credential management by the tax authority.

Early Findings

Data Availability

  • The initial round of research indicates that information on the US e-filing system API is adequate. However, details about the number of annual apps and/or users of the service may be limited. Additionally, although there appears to be information in the public domain about the use of online tax filing system APIs for the other countries, a comprehensive data availability assessment has not been conducted due to the limitation of time, i.e the UK, Canada, Australia, and the Scandinavian countries.

The US E-File

  • The US e-file method of submitting tax returns has been in place for more than 30 years, having been first launched in 1986 as a small test program for 5 tax preparers in Cincinnati, Raleigh-Durham, and Phoenix. It has since expanded to cater for millions of taxpayers in the US annually.
  • A comprehensive list of approved IRS e-file providers that have passed the IRS Assurance Testing System (ATS) requirements for Software Developers of electronic Employment Tax Returns for Tax Year 2021 can be found here. 
  • The e-file system caters to various categories of providers, with the four key groups including the electronic return originators (EROs), software developers, transmitters, and intermediate service providers (ISPs).
  • For instance, for software developers and transmitters, the US Internal Revenue Service (IRS) provides two tools for interaction with the Modernized e-file (MeF) System, which include the Software Developers Kit (SDK) and Client Applications.
  • The SDK provides "compiled binaries in Java (v1.6) and .NET (WCF v4.0) technologies so that developers can incorporate and use those binaries in their development environment. ItK provides clients a set of APIs to compose SOAP messages to MeF and process the response coming back from the system. In addition to compiled binaries, the toolkit also provides source code for both the Java and .NET SDKs for developers who might be interested in taking guidance from the source code to build their own solution."

Summary

  • The initial hour of research was spent providing a brief overview of the US e-file system, including its year of founding, the categories of groups catered for by the system's interface, a list of third party applications using it to offer e-filing services, and some API capabilities extended to software developers and transmitters by the system.
  • We can continue the research to comprehensively address each of the research criteria requested.
  • Below is the recommended research path.