WASHINGTON, D.C. — The Internal Revenue Service (IRS) states that it is making significant strides in modernizing its services and improving taxpayer experience, thanks to funding from the Inflation Reduction Act (IRA). The IRS recently provided an update on various projects aimed at expanding online tools, digital services, and in-person assistance to make tax filing and compliance easier for Americans.
IRS Commissioner Danny Werfel emphasized the transformative impact of the IRA funding. “Funding from the Inflation Reduction Act is helping spur innovation and improvement across the IRS to transform our operations in our work to help taxpayers and the nation,” Werfel said. He highlighted the ongoing expansion of online accounts, new digital tools, and increased in-person activities as key areas of progress.
New Features and Milestones in Digital Services
The IRS has introduced several new features designed to make digital interactions as efficient and user-friendly as those offered by financial institutions. These include enhancements to the Individual Online Account, such as the ability to:
- Retrieve all tax-related information from one source, including Wage & Income Account, Record of Account, and Return transcripts.
- Update the Identity Protection (IP) PIN using smartphones or tablets.
- View audit status information.
- Use a Lien Payoff Calculator to access lien information, calculate payoff amounts, and generate payoff letters.
- Complete the Pending Installment Agreement process without being redirected to a separate application.
- Access a comprehensive overview of account information, including tax refund status.
The Business Tax Account tool is now available in Spanish, making it easier for Spanish-speaking business owners to navigate their tax responsibilities. Additionally, sole proprietors can now download business entity transcripts directly from their accounts. This transcript includes essential information like business name, address, and location address for the Employer Identification Number on file.
The IRS has also made it possible to file amended business returns electronically, including Forms 940, 941, 943, and 945. This new feature allows IRS employees to access return information electronically, providing more accurate answers to taxpayer inquiries and minimizing errors associated with paper returns.
Document Upload Tool Hits Milestone
The IRS’s Document Upload Tool, which allows taxpayers to respond to IRS notices by uploading required documents online, has reached a significant milestone. Since its limited launch in 2021 and subsequent expansion in 2023, the tool has accepted over one million submissions. This tool simplifies the process for taxpayers and tax professionals by enabling them to respond to IRS notices using smartphones or computers.
Mobile-Adaptive Forms and Redesigned Notices
The IRS has introduced 30 mobile-adaptive forms, allowing taxpayers to fill out and submit common non-tax forms using cell phones and tablets. Since their launch in September 2023, more than 72,000 mobile-friendly forms have been submitted. These forms adapt to any screen size and ensure all required data fields are completed, reducing errors and delays in processing.
In preparation for the 2025 filing season, the IRS has also redesigned 100 of the most common notices sent to individual taxpayers. These redesigned notices account for about 90% of the total notice volume, representing approximately 150 million notices sent in 2022.
Expanding In-Person Assistance
The IRS is committed to providing in-person assistance, especially in underserved and rural communities. During the filing season, IRS Taxpayer Assistance Centers saw a 37% increase in face-to-face contacts, helping nearly 1.3 million taxpayers through mid-July. Additionally, the IRS’s volunteer program prepared 2.7 million returns, a 9.1% increase over the previous year.
Special Community Assistance Visits, funded by the IRA, offer face-to-face help to taxpayers living far from IRS offices. Recent events have been held in Roma, Texas; Humboldt, Iowa; Hazlehurst, Georgia; and Orocovis, Puerto Rico. Upcoming visits are planned for Thomasville, Alabama; Abilene, Kansas; West Plains, Missouri; Clarkston, Washington; Fairbanks, Alaska; and Potsdam, New York.
Modernizing Technology Infrastructure
The IRS is also modernizing its decades-old systems and equipment. New scanning equipment and automated mail-sorter machines have been installed in high-volume locations, streamlining the process of sorting, opening, and scanning mail. By the end of June, the IRS had scanned over 2 million pieces of paper, a significant step toward creating digital workflows.
A new data service allows tax professionals to create and manage payment plans on behalf of individual taxpayers through the Individual Online Account. This enhancement aims to improve the taxpayer experience and streamline the payment process.
The IRS is also updating its Human Resource IT systems, which have become outdated due to years of funding cuts. This multi-year project aims to modernize legacy HR applications, automate manual processes, and improve productivity, ultimately enhancing the employee experience and customer service.
Ensuring Compliance Among High-Income Taxpayers
The IRS is ramping up efforts to ensure that high-income individuals, large corporations, and partnerships pay their fair share of taxes. Budget cuts over the past decade had limited the IRS’s ability to keep pace with complex tax evasion strategies used by wealthy taxpayers. With IRA funding, the IRS is now focusing on high-end collection cases, targeting individuals with more than $1 million in income and over $250,000 in recognized tax debt. As of April 2024, these efforts have resulted in the collection of over $1 billion.
Future Improvements
Looking ahead to the 2025 filing season, the IRS plans to continue enhancing live assistance, expanding online services, and accelerating digitalization efforts. These initiatives aim to further improve taxpayer experience, increase operational efficiency, and ensure compliance with tax laws.
The IRS’s ongoing transformation, fueled by IRA funding, promises to make tax filing and compliance more straightforward and accessible for all Americans.
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