IRS launches paperless processing initiative

The IRS has unveiled its paperless processing initiative, which will allow taxpayers the option to respond to notices digitally  by the 2024 filing season, with the goal to go fully paperless for all tax returns for the 2025 season. According to the IRS this initiative “…will eliminate up to 200 million pieces of paper annually, cut processing times in half, and expedite refunds by several weeks.” The inability to digitally upload many tax documents and digitally inventory paper tax returns have frustrated taxpayers and caused many challenges for the IRS. Further delays are created when IRS tax agents manually enter paper information, which is repeated each year. There are one billion historical documents held by the IRS which costs taxpayers $40 million a year to store. Due to these issues the IRS has ambitiously set out to minimize the use of paper.

Taxpayers for the 2024 filing season will have the option to go totally paperless. All correspondence, forms, and responses will be 100% digital, allowing for quicker response times and significantly less delays in preparing tax returns. The IRS estimates that 94% of taxpayers will opt into paperless, resulting in 125 million paper documents that will be submitted digitally per year. As part of the paperless initiative, electronic filing will become available for amendments to tax documents like Forms 940, 941, and 941 (PR) which are common forms taxpayers historically needed to file on paper, and what the IRS calls, Request for Taxpayer Advocate Service Assistance, which allows taxpayers, especially low-income households, to get the tax help they need. For those who wish to continue filing paper returns, they will be able to do so.

By filing season 2025, the IRS plans to achieve paperless processing for all tax returns. The most used non-tax forms will be available digitally, including in mobile format. According to the IRS, 15 percent of Americans rely solely on mobile phones for their internet access, making forms available in mobile-friendly formats a key part of serving these taxpayers. Up to 136 million tax returns, non-tax forms, notices, and other documents will be processed digitally each year. This will improve tax services, cut processing time in half, and expedite processing of taxpayer refunds. The one billion historical documents will be digitized which will improve records, customer service, allow IRS employees quick and easy access to the historical tax records, and save the IRS (and taxpayers) $40 million dollars in annual storage costs.

This digitizing initiative is a great leap forward for improving IRS services. Errors that occur due to the manual input of data will be minimized, returns will be processed quicker, there will be major reductions in storage costs, and the IRS can finally focus more resources on customer service. In the future, taxpayers will have the ease of accessing their tax information on their computers and mobile devices, allowing them and their preparers to finish their returns quicker. According to the IRS, this may be possible by 2025. Paperless is coming, and it’s going to make doing taxes easier and more cost effective for taxpayers.