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IRS redesigning tax notices so they're more intelligible

IRS notice mailing envelope

The biggest complaint about taxes is that they're too high.

A close second is that the language of taxes is hard to understand.

The Internal Revenue Service can't do anything about the first one. You need to call your members of Congress to complain about tax rates.

But Uncle Sam's tax collector is taking steps to make some tax communications more comprehensible.

Improving intelligibility: Under the IRS' Simple Notice Initiative, the agency aims to simplify and clarify hundreds of the letters it sends annually to taxpayers.

The notice redesign effort will build this year on the Paperless Processing initiative the IRS announced last August, as well as expand on a recent successful pilot involving identity theft letters.

The most common notices that individual taxpayers receive are the effort's initial focus during this current tax-filing season. The notice simplification process will accelerate during the 2025 and 2026 filing seasons, expanding into business tax notices.

Plain English effort affects millions: The IRS sends about 170 million notices to individual taxpayers every year.

These mailings cover a range of tax issues, from claiming credits and deductions to issues affecting how the taxpayers meet their tax obligations.

Getting an unexpected mailing from the IRS is rarely welcome. Making things worse, the notices are often long and difficult for taxpayers to understand. Some contain extraneous inserts.

And adding insult to possible tax injury, the IRS acknowledges its letters don't always clearly and concisely communicate the next steps a taxpayer must take to resolve a tax matter.

"Simplifying and clarifying these letters will make it easier for taxpayers to understand the tax issues involved," said IRS Commissioner Danny Werfel in announcing the Simple Notice Initiative.

Revised notices for 2024 tax season: Many taxpayers will see the changes this filing season. In 2023, the IRS reviewed and redesigned 31 notices.

These include notices to taxpayers who served in combat zones that may be eligible for tax deferment, notices that remind a taxpayer that they may have unfiled returns, and notices that remind a taxpayer about their balance due and where they can go for assistance.

About 20 million of these now-rewritten notices were sent to taxpayers in calendar year 2022, according to the IRS.

Notice changes coming in filing season 2025: By filing season 2025, the IRS plans to review and redesign the most common notices that individual taxpayers receive.

The IRS says it will focus on up to 200 notices that make up about 90 percent of total notice volume sent to individual taxpayers. This represents about 150 million notices sent to individual taxpayers in 2022.

The 2025 revisions will include notices to propose adjustments to a taxpayer's income, payments, credits, and/or deductions; notices to correct mistakes on a taxpayer's tax return; and notices to remind a taxpayer of taxes owed.

The IRS will be actively engaging with taxpayers and the tax professional community to gather feedback on how these notices should be redesigned.

Filing season 2026 and beyond: In 2026, the IRS will review and redesign notices sent to businesses taxpayers. More than 40 million businesses get these letters every year, says the IRS.

The IRS will also review and redesign less common notices sent to individual taxpayers.

In future filing seasons, the IRS will review and redesign additional notices sent to business taxpayers.

The IRS says it will share additional details on its notice simplification plan in these areas in future updates.

Lessons from ID theft notice pilot: A recent IRS pilot involving communications with possible identity theft victims offers an example of how revised notices can improve taxpayers' experience and IRS operations.

The agency sent redesigned versions of Notice 5071C to a certain taxpayers, asking them to verify their identity and tax return online or over the phone to prevent the processing of fraudulent tax returns.

IRS simple notices initiative

See more tax forms and more about them at Tax Forms 2024.
(Image Source: U.S. Treasury IRS Simple Notice Initiative Fact Sheet )

Part of the 5071C redesign was making it shorter, going from seven to two pages. The IRS also improved readability by updating the font and adding visual enhancements, such as headers, icons, and step-by-step instructions.

The IRS also clarified instructions and added a QR code that directs taxpayers to an IRS webpage where they can respond to the notice online instead of by calling.

Cutting down on follow-up calls: The IRS sent the redesigned Notice 5071C to 60,000 taxpayers. Compared to taxpayers who received the original notice, there was a 6 percent increase in taxpayers who used the online option.

The online response was welcome news for the IRS, which has for years been encouraging taxpayers to use IRS.gov resources.

Even more encouraging, the IRS saw a 16 percent reduction in taxpayers who called the IRS as their first action.

While taxpayers will always have the option to call, IRS telephone response has long been a sore spot for to taxpayers (and tax professionals). If all redesigned notices show a similar reduction in calls, that will mean more taxpayers who do need to talk to an IRS representative will get through more quickly.

That's good for everyone.

"This will help reduce questions and save headaches for taxpayers, the tax professional community as well as the IRS," said Werfel. "Clearer letters can create a ripple effect, reducing taxpayer phone calls and visits and freeing up IRS staff to help others."

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