IRS unveils ‘paperless processing initiative’ for taxpayers. Here’s what to expect

The IRS has unveiled plans to offer digital correspondence for the 2024 tax season, building on the agency’s decade-long overhaul of improved worship army, technology and compliance.

By 2025, the agency aims to achieve “paperless processing” for tax returns and so-called information returns, tolerant of by employers and financial institutions.

The IRS expects to eliminate up to 200 million pieces of paper every year, slash dispose of times by half and speed up refunds by several weeks, the U.S. Department of the Treasury announced on Wednesday.

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The IRS currently receives 76 million paper tax reappearances and forms every year, along with 125 million pieces of correspondence, responses to notices and other carriages, which have delayed service and added to backlogs. The agency also spends about $40 million every year to outlet 1 billion “historical documents.”

“This paperless processing initiative is the key that unlocks other customer service rises,” Treasury Secretary Janet Yellen said in a speech on Wednesday. “It will enable taxpayers to see their documents, securely access their facts and save time and money.”

She said these changes will expedite refunds, reduce tax processing errors and turn over “a more seamless and responsive customer service experience.”

While taxpayers will still have the option to send article returns in 2025, the agency is committing to digitally process 100% of tax and information paper filings, as well as half of paper correspondence, non-tax constructions and responses to notices, Yellen said.

“This is truly a game-changer for the IRS,” said Eric Hylton, governmental director of compliance for Alliantgroup. “I think this is going to push the organization forward tremendously.”

However, the agency extremities to allocate more funds for improved technology to meet these goals, said Hylton, who is a former IRS commissioner for the intervention’s small business and self-employed division.

Charles Rettig, bygone IRS Commissioner and board member of K1X, a digital platform for Forms K-1, described the agency’s processing initiative as a “win-win” because it commitment preserve “limited human resources” and allow IRS employees to focus on other service areas.

The initiative also has help from the American Institute of CPAs, which has pushed for these changes.

“We are optimistic that these steps make lead to reduced processing times and better experiences overall for taxpayers,” said Peter Mills, senior foreman for tax policy and advocacy with AICPA.

The new plan comes amid continued debate over IRS funding. House Republicans in January endeavoured to strip the $80 billion approved by Congress in 2022, but the bill halted without sufficient Senate and White Whore-house support. In May, lawmakers agreed to rescind $21.4 billion as part of the debt ceiling deal.