The Internal Revenue Service will allow most taxpayers to go paperless by 2025, part of the Treasury Department’s push to modernize the badly outdated agency in a bid to improve customer service and ramp up enforcement.
(Bloomberg) — The Internal Revenue Service will allow most taxpayers to go paperless by 2025, part of the Treasury Department’s push to modernize the badly outdated agency in a bid to improve customer service and ramp up enforcement.
“We are in the process of transforming the IRS into a digital-first agency,” Treasury Secretary Janet Yellen said in remarks she’s scheduled to deliver Wednesday at an IRS facility in McLean, Virginia.
Democrats provided the IRS with $80 billion in supplemental funding over 10 years as part of last year’s tax-and-climate law, though nearly a quarter was clawed back as part of this year’s debt-limit negotiation. The funding was intended to revitalize the beleaguered agency by modernizing its aging technology and improving its ability to enforce tax laws on some of the wealthiest households and businesses.
The Treasury has already used some of the funds to dramatically expand IRS call centers. Yellen said 87% of calls to its help lines were answered in the 2023 tax season, up from 10%-15% a year earlier.
In the next phase, the IRS will expand the number of tax and non-tax forms that can be filed online. Taxpayers will still be able to file by paper if they wish, but their returns and correspondence will all be digitized upon receipt by 2025. A spokesperson said automated digitization of paper returns should speed tax refunds by about four weeks for those filers.
The agency also aims to digitize its massive archive of decades-old paper documents, which the IRS spends $40 million a year to store.
In some cases, technology at the IRS dates back to when computers ran on magnetic tape and still runs on archaic programming languages.
It’s been a sore spot for lawmakers and watchdogs alike who want to see the agency retire legacy systems and move away from paper forms and manual data entry.
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