IRS tests secure transcript technology for tax pros


The Internal Revenue Service has been pilot testing new technology allowing for secure tax transcript retrieval that can integrate with an accounting firm’s practice management system.

The agency has developed an application programming interface that practice management software vendors can use to integrate their systems. One practice management software developer, Canopy, said Monday it has been part of the IRS pilot program. The company said it has implemented the API within its practice management product before the public release by the IRS in June. A few other companies have been collaborating with the IRS on testing the new API. Canopy said organizations that offer a third-party transcript retrieval service will no longer be able to offer that service as of May 23 if they haven’t built an integration with the IRS transcript API. The IRS did not immediately respond to a request for comment.

The IRS has been trying to modernize its technology over the years, but much of it remains antiquated, with some of its computers dating back to the early 1960s. The Taxpayer First Act, which Congress passed in 2019, included funds for the IRS to update its technology, and the Biden administration has proposed to provide more funding for the IRS to upgrade its technology as part of its American Families Plan to catch more tax evasion. Improving cybersecurity at the IRS has also been an important part of the initiative, especially after hackers and identity thieves managed to get access to tax returns and taxpayer information through some of the IRS’s online services several years ago, including its Get Transcript app, which forced the IRS to shut down the e-Services in 2016 during tax season until it could improve the user authentication procedures (see story). The new API is part of a multi-year plan announced by the IRS in 2019 to update and modernize its technology, which includes improving taxpayer services, cybersecurity and taxpayer data protection.

The IRS headquarters in Washington.

Andrew Harrer/Bloomberg

Canopy said it’s the first company to be added to the transcript API pilot program, building on a long-standing relationship with the IRS. “Canopy has been closely collaborating with the IRS for years through feedback sessions, testing, and more to help improve their systems and provide a better experience in the tax ecosystem,” said Canopy chief product officer Larry Furr in a statement. “We are honored to have been involved in this update and are thrilled to be able to provide our clients with the most up to date technology available for accountants. Canopy’s new Transcript Tool will continue to work seamlessly through this IRS transition period.”

For more information, visit Canopy’s Transcript Tool page.

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