Third-party software integration with IRS systems

by | Sep 12, 2025 | Technology & Process Questions

Here’s what HIVE AI had to say about “Third-party software integration with IRS systems”:

Third-party software integration with IRS systems

Overview

Integrating third‑party software with IRS systems generally falls into a few tracks: Modernized e‑File (MeF) for returns and extensions, Information Returns Intake System (IRIS) for 109x forms, specialized excise filing programs, and secure identity/authorization and cybersecurity controls for any solution that touches IRS data. Below is a practical roadmap with authoritative references.

Modernized e‑File (MeF) and ATS testing

  • MeF requires developers/transmitters to pass the IRS Assurance Testing System (ATS) for the return types supported. IRS publishes approved providers by program year; being “approved” means your software can format data correctly for IRS processing, not that it covers every schedule or use case. Confirm your solution appears on the current approved list for your program/tax year and understand the scope statement. 1
  • For MeF business submissions, follow Publication 5078 ATS guidelines. Where IRS has defined structured schemas, you must use them; attachments should follow IRS instructions. Ensure consolidated return logic rolls entity details up correctly and provides required statements where applicable. 2

Information Returns Intake System (IRIS) and APIs

  • If you are integrating for 1099/W‑2 series via IRIS using Application‑to‑Application (A2A), you will need an API Client ID after obtaining your IRIS Transmitter Control Code (TCC) and meeting e‑Services A2A program requirements. The API Client ID authenticates and authorizes access to IRIS A2A services. Responsible Officials must keep annual software package metadata current, as software IDs change each tax year. 3
  • IRS also maintains Publication 1582 (Information Returns Vendor List) as a courtesy directory of service bureaus and software vendors; inclusion is not an approval or endorsement, but can help filers locate third‑party providers. Avoid duplicate filings if a service bureau transmits on your behalf. 4

Excise and other specialized e‑file programs

  • For excise filings (e.g., ExSTARS), every information provider must complete testing in the specified EDI version before production, even if using a third‑party product. Verify your vendor’s latest patch/release is on the IRS approved list for transmitters/software developers before submitting with those changes; transmitters must test each new release. 5

Identity, access, and security expectations

  • For software that enables online preparation/e‑file for individuals, Publication 1345 requires robust identity verification and electronic signature controls. Identity proofing can use KBA; after three failed KBA attempts, a handwritten signature is required. E‑signatures must be cryptographically linked to records and rendered tamper‑evident. Disclose to taxpayers that IRS does not receive their credit report and that identity vendors do not receive taxpayer return data. 6
  • Publication 1345 also mandates weekly external network vulnerability scans of all system components by a PCI SSC Approved Scanning Vendor (ASV). Hosted environments must comply with applicable PCI DSS requirements. 6
  • IRS cybersecurity contract language (useful as a baseline for vendors integrating or contracting with IRS) aligns to FISMA and NIST SP 800‑53 controls, least‑privilege entitlements (BEARS), privileged account security (PUMAS), and enterprise audit logging (ESAT) with organization‑wide collection and correlation per OMB M‑21‑31. Expect to provide standardized audit trails and logs, including for cloud services. 7
  • If your solution processes Federal Tax Information (FTI) and relies on open‑source components, ensure supportability and Pub. 1075 alignment, including NIST‑validated, latest FIPS 140 compliant crypto for any FTI in transit or at rest. Consider vendor‑backed support or third‑party maintainers to meet “supported component” requirements. 8
  • Internally, the IRS maintains inventories of third‑party and “critical” software per OMB M‑22‑18 in IRM 10.8.1. While internal, this signals the expectation that vendors maintain accurate SBOMs and inventories for risk management. 9

API strategy and roadmap

  • IRS’s Electronic Tax Administration Advisory Committee (ETAAC) highlights the value of APIs and suggests a framework for API modernization to support transcript access, identity, and validation workflows. For vendors, this points to expanding opportunities to integrate securely with IRS services as APIs mature; plan for SADI‑based authentication and data minimization. 10

Data privacy, disclosures, and third‑party usage

  • For preparer software, Treasury Reg. §301.7216‑2 permits certain uses/disclosures of tax return information within a U.S. firm for preparation/auxiliary services, software updates to reflect IRS changes, and requires taxpayer consent before disclosures outside the U.S. Ensure your data flows and vendor contracts comply with 7216 and its consent rules. 11
  • IRS records/information are broadly defined; if you are an IRS contractor or handle IRS‑provided data under agreement, your records may be treated as IRS records with associated disclosure restrictions. Build governance to prevent unauthorized disclosures. 12

Operational integration tips

  • Manage environment and release alignment: IRS programs tie approvals to specific tax years, schemas, and software IDs. Update your e‑file or IRIS application records when adding new packages or versions and re‑enter test cycles as required by program rules. 3
  • Validate third‑party transmitter versions before you submit through them; transmitters are responsible to re‑test each new release, and IRS posts the latest approved patches/versions. Align your submission timing to avoid mismatches. 5
  • If you integrate to legacy portals like FIRE for information returns, follow the connectivity and browser requirements, turn off pop‑up blockers, and use the test environment during the window IRS provides. 13

Governance for collaborations and threat intelligence

  • IRS may disclose specified return information to specified ISAC participants for identity theft and cybersecurity purposes. If you participate in industry threat‑intel sharing for tax administration, ensure your controls and agreements reflect §6103(k)(10) boundaries. 14

Compliance checklist for third‑party software integrators

  • Confirm program: MeF, IRIS A2A, excise (ExSTARS), FIRE, or other IRS interface, and obtain required IDs (EFIN, TCC, API Client ID).
  • Complete required ATS/testing and keep your entry on the relevant approved provider list current for the active tax year. 1
  • Implement identity, e‑signature, and tamper‑evident record controls per Pub. 1345; conduct weekly ASV vulnerability scans; ensure PCI DSS‑aligned hosting where applicable. 6
  • Use IRS‑defined schemas/attachments for MeF; follow consolidated return roll‑up rules. 2
  • Ensure all FTI is protected with validated FIPS 140 crypto; maintain supportability for all components; prepare SBOMs/inventories. 8
  • Align data use/disclosure with 26 CFR 301.7216‑2; obtain consents where required, especially for any offshore processing. 11

If you share which IRS program you’re targeting, I can map the exact testing steps, IDs, and required artifacts for your integration.

Sources

1 – IRS.gov – Tax year 2024 7004 Modernized e-File (MeF) providers 📄 Summarize
2 – IRS – Publication 5078 Assurance Testing System (ATS) Guidelines for Modernized e-File (MeF) Business Submissions 📄 Summarize
3 – IRS – Publication 5718 Information Returns Intake System (IRIS) Electronic Filing Application to Application (A2A) Specifications 📄 Summarize
4 – Rev. Proc. 2011-40 📄 Summarize
5 – IRS.gov – Use of third-party transmitters 📄 Summarize
6 – IRS – Publication 1345 Authorized IRS e-file Providers of Individual Income Tax Returns 📄 Summarize
7 – IRS.gov – Cybersecurity requirements contract language 📄 Summarize
8 – IRS.gov – Use of federal tax information (FTI) in open-source software 📄 Summarize
9 – IRS IRM 10.8.1 Security Policy 📄 Summarize
10 – IRS – Publication 3415 Electronic Tax Administration (ETA) Advisory Committee Annual Report to Congress 📄 Summarize
11 – Treasury Regulation 301.7216-2 📄 Summarize
12 – Treasury Regulation 301.9000-1 📄 Summarize
13 – Rev. Proc. 2012-34 📄 Summarize
14 – IRC § 6103(k) 📄 Summarize