Most taxpayers will have the option of going entirely paperless starting with the 2024 filing season. The IRS said today that it aims to “achieve paperless processing for all tax returns” by 2025. The agency says the IRS Paperless Processing Initiative will “eliminate up to 200 million pieces of paper annually, cut processing times in half and expedite refunds by several weeks.” The project is funded by President Biden’s Inflation Reduction Act of 2022.
The IRS expects the changes will solve the annoyance of transmitting digital documents in some cases but still having to mail paper ones in others. “For decades, taxpayers had to respond to notices for things like document verification through the mail, and IRS employees had to manually enter numbers from paper returns into computers one digit at a time, creating significant delays for taxpayers and challenges for IRS staff,” the US Treasury Department wrote today.
Starting next year (2024 filling season), taxpayers can digitally submit all correspondence — including many non-tax forms. The IRS says at least 20 additional e-File tax forms will be available digitally starting then. It estimates that over 94 percent of individual filers will never have to mail another tax form or document. The initiative will spare taxpayers from sending approximately 125 million paper documents annually.
By the 2025 filling season, “an additional 150 of the most used non-tax forms will be available in digital, mobile-friendly formats.” (The IRS cites research showing that around 15 percent of Americans rely solely on their phones for internet access.) It says all paper-filed tax and information returns — an estimated 76 million paper documents per year — will be processed digitally as soon as it receives them. Similarly, half of paper-submitted correspondence, non-tax forms and notice responses (another 60 million paper docs) will be recorded digitally. Finally, the IRS also plans to digitize up to one billion historical documents, making accessing older filing data easier for customer service agents and taxpayers.
The IRS says its Paperless Processing Initiative will help eliminate errors from manual data entry, speed up processing and let the agency pour more resources into taxpayer support. “Customer service employees do not currently have easy access to the information from paper returns and other correspondence submitted by mail,” the Treasury Department wrote. “Digitization and data extraction will give them access to that information they need to better serve taxpayers.”
The agency also expects digitization will help them to hold billionaires and corporations accountable. “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 gap, including wealthy individuals and large corporations using complex structures to evade taxes they owe.”