IRS is making progress on its digitization efforts, commissioner says

The Internal Revenue Service is making progress in its push toward digitization — a move made possible by $80 billion in funding from the Inflation Reduction Act — but the agency isn’t there just yet, Commissioner Danny Werfel said Thursday. 

During the ACT-IAC/DCI CX Summit in Arlington, Va., Werfel acknowledged Washington Post photos of an IRS cafeteria in Austin, Texas, that was flooded with paper tax return files, while stumping for the agency’s paperless future, which he said would improve data security and efficiency. 

Most taxpayers — but not all — who want to take advantage of electronic options to submit all paperwork this filing season will have to wait. “Believe it or not, we’re not there yet,” Werfel said. For the filing of paper tax documents, Werfel said the agency plans to scan them and upload them into its internal system. 

“That’s an example of moving from a non-modern environment to a modern environment,” Werfel said, “and demonstrating that the way we’re using [Inflation Reduction Act] money is to benefit taxpayers of the nation, not do something that anyone should be concerned about.”

Werfel said the agency needed to address “some real mission-critical risks” with IRA funds, including improvements to static IRS web tools and hiring staff so that taxpayers have better than a 1 in 5 chance of getting through to the IRS when calling.

“We have an immediate responsibility to demonstrate impact with these funds, as well as a responsibility, a stewardship responsibility to make sure that we’re investing for the medium and long term,” Werfel said

Werfel also said that the IRS is aiming to address the growing risk of fraudulent schemes and the proliferation of bad actors that are “victimizing honest taxpayers.” The IRS is able to play “catch up” thanks to IRA funds, he said. 

An IRS “that’s funded, it’s leaning in, that’s getting tools, it’s wanting more sophisticated information campaigns [and] parenting with local community-based organizations,” Werfel said. The agency is “changing the entire way in which we do the system so that it makes it harder for these operators to exploit.”