IRS launches digitization effort to go paperless by 2025

The IRS Wednesday announced an ambitious digitization effort that will give taxpayers the option to go paperless for all IRS correspondence by 2024 filing season and provide the added benefit of reducing tax evasion by wealthy individuals and large corporations.

According to the agency, the effort will eliminate up to 200 million pieces of paper annually, cut processing times in half, and expedite refunds by several weeks.

The digitization initiative is being financed through an $80 billion infusion of cash for the IRS over 10 years under the Inflation Reduction Act (IRA) which President Joe Biden passed into law last August.

“Thanks to the IRA, we are in the process of transforming the IRS into a digital-first agency,” Treasury Secretary Janet Yellen said during a visit to an IRS paper processing facility in McLean, Virginia with IRS Commissioner Daniel Werfel on Wednesday.

“By the next filing season,” she said, “taxpayers will be able to digitally submit all correspondence, non-tax forms, and notice responses to the IRS,” Yellen added.

The IRS also said in its announcement of the digitization program, that it would help enable agency 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.”

Using IRA resources, taxpayers are now able to respond to more notices online, and the IRS says it has made significant progress adopting new technology that automates the scanning of millions of paper returns. 

In the coming two years, taxpayers will be able to digitally submit all correspondence, non-tax forms, and responses to notices which will allow more than 94% of individual taxpayers to no longer ever need to send mail to the IRS, according to the agency. 

It added that taxpayers who still want to submit physical paper returns and correspondence will be able to do so.

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.