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Frequently Asked Questions

What is STAWRS?

STAWRS is a joint project of the Department of Treasury, the Internal Revenue Service (IRS), the Social Security Administration (SSA), the Department of Labor (DoL), the Office of Management and Budget (OMB), and various State and private organizations. Vice-President Gore's National Performance Review recommended that Treasury assume responsibility for this project in recommendation TRE05, "Simplify Employer Wage Reporting." STAWRS is also part of the Re-Inventing Government (REGO) II proposals announced in June 1995.

We pronounce the name of the project as "STARS," keeping the "w" silent. The name of the project has changed over the past year from the "Wage Reporting Simplification Project" to STAWRS, but we plan to keep this new name because it captures the idea of reaching high for ambitious goals.

WHAT IS THE PURPOSE OF STAWRS?

The purpose of the project is to reduce the tax and wage reporting burden of employers through re-engineering current reporting processes. This project was begun in 1990 as a suggestion from the business community to IRS to help relieve the reporting burden. The two major goals of the project are to reduce employers' reporting burden for tax and wage data and to improve the efficiency and effectiveness of government operations.

In order to accomplish these goals, the three primary objectives of STAWRS are to 1) harmonize tax and wage codes--e.g., have tax jurisdictions use similar definitions of key terms: employee, employer, employment and wages; 2) develop single-stop electronic filing for tax and wage reporting--e.g., have employers and tax agencies use national electronic commerce networks; and 3) provide employer services for easier data submissions-- e.g., have employers validate employee social security numbers via PCs or phones.

WHAT ARE THE EXPECTED BENEFITS OF STAWRS?

The MITRE Corporation estimates that STAWRS could save the federal agencies involved between $500 million to $1.5 billion (over 15 years) with a benefit to cost ratio ranging from 2.0 to 5.0 depending on the level of functionality chosen and implemented.

However, most of the STAWRS savings are to employers; these savings range from $1.6 billion to #13.5 billion (over 15 years). FTE estimates were not made as part of the MITRE study; costs were based on time savings through reporting efficiencies. However, electronic data interchange (EDI) and electronic filing technologies could substitute for paper filings, reducing the requirements for paper processing.

WOULD ALL STATES AND ALL TAX AUTHORITIES BE REQUIRED TO PARTICIPATE--AND REQUIRED BY WHO?

STAWRS is built on the premise of voluntary participation by the parties involved. One of the major aspects of STAWRS is to develop cost/benefit studies of the various services that are being developed in order to know which ones provide the greatest benefit to employers and the governments. The development of these services will depend, in large part, on the kind of evidence that is produced about the benefits derived from new approaches to tax and wage reporting and the services being proposed for employers. Any efforts to improve the system will assess first the advantages of new approaches before any recommendations for adoption by agencies will be made.

WOULD STAWRS SET UP A NEW LAYER OF BUREAUCRACY?

We are not creating another agency that will try to duplicate the existing tax and wage reporting systems. STAWRS is trying to simplify and facilitate the exchange of information between employers and agencies, not slow down or impede the current reporting arrangements. Through electronic filing, we think that it will be possible for employers to file similar or same data at one time with multiple agencies. Therefore, we are working toward a single-filing electronic environment, using national electronic commerce networks, but the data will still be distributed in a timely manner to existing agencies that require it. In regard to the range of "determinations" about employers, STAWRS is not going to come between employers and the agencies making those decisions.

ASSUMING STAWRS GETS UP AND RUNNING, WHAT ENTITY WOULD ANSWER SPECIFIC QUESTIONS ABOUT VARIOUS FILINGS.

At the present time, no determinations have been made about which entities would be providing which services or functions. We are looking into this matter, but it will be resolved only after some prototype and pilot efforts have been completed and recommendations made about which agencies are best positioned strategically to provide these kinds of services. Right now, we think that there are multiple agencies which could be considered for providing some of the services that are being proposed Obviously, this situation will require careful coordination among the parties involved, but with current telecommunication and computing capabilities, we think that many agencies can work together to provide quality services to employers.

WHAT KIND OF SUPPORT HAS STAWRS RECEIVED FROM THE ADMINISTRATION AND FROM CONGRESS?

The White House endorsed STAWRS on June 9, 1995 as part of the second round of re-inventing government initiatives (called REGO II). In addition, STAWRS was endorsed by Vice-President Gore's first "re-inventing government" report in 1993. Furthermore, STAWRS has broad support among the Federal agencies involved, IRS, SSA, DoL, OMB, and Treasury. Each agency is contributing either personnel, budgetary support, or both to the project. In addition, some congressional offices have been briefed on the project and offered support for what STAWRS is trying to accomplish. However, of equal importance, is the fact that many State agencies are also supporting STAWRS because they too have a significant stake in the success of this effort.

HOW WOULD STAWRS BE FUNDED ASSUMING IT GETS UP AND RUNNING?

STAWRS is currently funded through the IRS' Tax Systems Modernization program. However, once the prototypes have been fielded and tested, cost sharing arrangements among the agencies involved will be addressed. Until questions about the feasibility of various services are tested, we will not know how to estimate how costs will be determined.

WHAT OPPORTUNITY WOULD EMPLOYERS HAVE TO COMMENT ON STAWRS AND TO HELP RESOLVE PROBLEMS ONCE IT IS UP AND RUNNING?

At every step in the development of STAWRS, the employer community has been involved. Employer input has been continuously sought through open working group meetings, focus groups targeting on small employer needs, and site visits to gather data from employer operations in meeting current reporting requirements. At the present time, all documents produced on the project have gone through an extensive review process, where Federal and State agencies and employer representatives have had a chance to read draft proposals and comment on them.

In the future, a structured approach to getting feedback from employers is being developed to get comments on services being provided or planned from STAWRS Executive Steering Committee, a body chaired by Treasury with 2 senior officials each from IRS, SSA, and DoL.

HOW PEOPLE FIND OUT ABOUT THIS PROJECT?

STAWRS does distribute information about the project to any person or organization that requests it. The STAWRS fax number is 202-566-8149; the mailing address is STAWRS Project Office, 1425 New York Avenue N.W. Suite 200, Washington, D.C. 20017. We are eager to help anyone understand what STAWRS has accomplished and what it plans to achieve in the future.

WHAT LEGISLATION WILL STAWRS REQUIRE?

The Harmonized Wage Code will require legislation at both the Federal and State level. To "harmonize" the tax and wage definitions of key terms such as "employment, employee, employer, and wages," various statutory exceptions under these terms will have to be examined and legislation proposed to bring these terms into uniformity nationwide.

By September 30, 1995, a draft code that details this harmonization is scheduled for delivery and will be provided to a wide audience for review and comment. In addition, a "proof of concept" test, using a selected number of State codes, will be carried out in 1996. This test will demonstrate how to harmonize Federal and State codes.

Through these efforts, it is expected that draft legislation will be ready by 1997.

WHAT KIND OF COOPERATION WITH STATES AND EMPLOYERS IS NEEDED?

STAWRS already has an unprecedented level of cooperation with Federal agencies, States, and employers in developing the concepts of redesigning tax and wage reporting. Over 100 participants have been involved in a series of national meetings where the harmonized wage code and the functionality for STAWRS has been discussed and developed. From these meetings, the current design for STAWRS has emerged. Cooperation will continue to be necessary in setting up pilot efforts to demonstrate how agencies can work together to reduce employer reporting burden. For example, already 29 States are participating in the "Paper W-2 Project" to reduce small employer burden for filing. Other pilots will involve electronic filing with States, consolidation of data reporting, and technical assistance for employers. Finally, when legislation for the harmonized wage code is ready, enactment and implementation of that legislation will be needed at both the Federal and State levels. Ultimately, employers will benefit from all of these actions.