The IRS is planning on going paperless, as best as they can, starting in 2024. What does that mean for tax professionals? Well, it means a few things. First, the IRS will be able to do more with less. This allows them to shift employees to other tasks, such as manning more phone lines. Or even better, manning a digital account access point. You will able to access more through your Tax Pro Online account and you will be able to see and do more through your electronic access without involving a human being.
Below is a list of what the future will look like at the IRS and you can see, guess or infer what that will me for you as a tax professional in the areas of tax preparation, tax resolution representation and IRS exam representation.
Filing season 2024: Taxpayers will be able to go paperless
- Taxpayers will be able to digitally submit all correspondence, non-tax forms, and responses to notices; as a result, the IRS estimates more than 94% of individual taxpayers will no longer ever need to send mail to the IRS. Taxpayers use non-tax forms to request or submit information on a range of topics, including identity theft and proof that they are eligible for key credits and deductions to help low-income households. Achieving this milestone will enable up to 125 million paper documents to be submitted digitally per year. Taxpayers who want to submit paper returns and correspondence can continue to do so.
- Taxpayers will be able to e-file 20 additional tax forms. Achieving this milestone will enable up to 4 million additional tax documents to be filed digitally every year. This includes amendments to Forms 940, 941, 941-SS and 941 (PR), which are some of the most common forms taxpayers file when amending returns.
- At least 20 of the most used non-tax forms will be available in digital, mobile friendly formats that make them easy for taxpayers to complete and submit. These forms will include a Request for Taxpayer Advocate Service Assistance, making it easier for taxpayers to get the help they need.
Filing season 2025: IRS achieves paperless processing for tax returns
- By filing season 2025, an additional 150 of the most used non-tax forms will be available in digital, mobile friendly formats. An estimated 15 percent of Americans rely solely on mobile phones for their Internet access—they do not have broadband at home—and making forms available in mobile-friendly formats is key to serving these taxpayers.
- IRS will digitally process all paper-filed tax and information returns. Achieving this milestone will enable up to 76 million paper documents to be processed digitally every year, improving service, cutting processing times in half, and expediting taxpayer refunds by several weeks.
- Half of paper-submitted correspondence, non-tax forms, and notice responses will be processed digitally. Achieving this milestone will enable up to 60 million paper documents to be processed digitally every year. All paper documents—correspondence, non-tax forms, and notice responses–will be processed digitally by filing season 2026.
- Up to 1 billion historical documents will be digitized, improving customer service, giving taxpayers access to their data, and ultimately saving IRS approximately $40 million in annual storage costs.
Paperless processing is the key to unlocking service improvements
- Digitization has far-reaching implications for improving IRS service. Digitizing paper returns will eliminate errors that result from manually inputting data from paper returns, which will speed up processing, reduce storage costs, and allow IRS to focus more resources on customer service.
- Once paper returns are digitized, extracting the data will enable IRS customer service employees to more quickly and accurately answer taxpayer questions and resolve issues. Customer service employees do not currently have easy access to the information from paper returns and other correspondence submitted by mail. Digitization and data extraction will give them access to that information they need to better serve taxpayers.
When combined with an improved data platform, digitization and data extraction will enable data scientists to implement advanced analytics and pattern recognition methods to pursue cases that can help address the tax, including wealthy individuals and large corporations using complex structures to evade taxes they owe.
Let’s hope this changes things for the better for everyone. Oh, please don’t expect things to work perfectly at first. There are bound to be bugs in the system. Also, please be smart in your data security as this will only bring more risk to you and your clients. The bad guys will find some way to take advantage of this new way of communicating with the IRS. Good luck!
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Dan Henn, CPA, CTR™, NTPI Fellow
Tax Pro Academy, LLC