By David Hubler
Special to The Washington Post
Monday, February 4, 2008

Lockheed Martin of Bethesda has won a four-year, $33 million contract to upgrade an Internal Revenue Service program that helps professional tax preparers and others conduct business with the agency over the Internet.

The IRS's e-services system allows tax professionals, including corporate financial officers and registered agents, to view and modify forms and file company returns and other documents electronically. The system also acknowledges receipt of accepted submissions.

According to the IRS, 116,223 tax professionals are registered to use e-services. Most of them file quarterly and annual returns for several clients, either separately or in bulk.

The company initially will develop and maintain the new software for e-services, said Joseph Cipriano, president of business process solutions at Lockheed Martin. While the company will maintain the system and carry out a series of enhancements, it will not operate it, he said.

"We also serve in a consulting role . . . helping them with their modernization vision and strategy," he said.

About 30 employees from Lockheed's business process solutions unit will perform the work, which will include upgrading servers and computers, and designing a Web-based suite of applications to make tax collection easier and faster.

The applications will include internal checks designed to reduce the number of rejected documents. To achieve this, the system will verify that taxpayer identification numbers, personal identification numbers and company identifiers have been entered correctly before a preparer can submit a filing, Cipriano said.

The technology will help reduce errors, ensure the system runs smoothly and lower costs for the IRS, he said. "The agency is encouraging folks to file [electronically] because it saves them time and money, and it speeds refunds," he said.

Eventually the e-services system will become the electronic entry point for the online e-file system, which is increasingly being used by individual taxpayers. Fifty-seven percent of U.S. taxpayers used e-file in 2007, up from 54 percent in 2006.

Cipriano said the e-services upgrade should be completed by April.

David Hubler is an associate editor with Washington Technology magazine. For more news on government contracts, go tohttp://www.washingtontechnology.com.