Don't Mess With Taxes

The Internal Revenue Service, like almost every other entity in our lives, continues to expand its digital reach.

Taxpayers have for decades been encouraged to electronically file and pay taxes. This year, the IRS tested Direct File that let a limited number of taxpayers prepare online and then e-file directly with the agency instead of using a commercial tax software program.

We also can access our taxpayer accounts online. In certain situations, we can contact the IRS via email. And the IRS looking to expand paperless operations in the near future.

Uncle Sam’s digital tax collector got another boost in the IRS’ Strategic Operating Plan update issued earlier this month.

This latest document updates the IRS’ announced plans last April for using the additional Inflation Reduction Act funds.

Like that 2023 report, the May 2, 2024, report focuses on five objectives: 

Objective 1. Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible.

Objective 2. Quickly resolve taxpayer issues when they arise.

Objective 3. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap.

Objective 4. Deliver cutting-edge technology, data, and analytics to operate more effectively.

Objective 5. Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers. 

Increasingly online IRS: One way to do that, according this SOP update, is to increasing online services and accelerate digitalization.

The IRS wants to reach the point where all taxpayers, if they so choose, can meet all of their responsibilities, including all interactions with the IRS, in a completely digital manner.

Already, notes the report, the IRS has achieved several benchmarks for taxpayers who would prefer to interact with the IRS digitally.

As the above graphic from the report (page 36) shows, they include updated individual taxpayer online account capabilities with regard to bank accounts; new voice bots to help taxpayers with a wide range of issues; a first-ever IRS Business Tax Account for small business owners, individual partners of partnerships, individual shareholders of S corporations, and sole proprietors with an employer identification number (EIN); an enhanced the Tax Pro Account; and the capability for taxpayers to digitally submit online all correspondence and responses to notices and letters that do not have a filing or payment action.

That online notice response options, says the IRS, could mean 94% of individual taxpayers will no longer have to send mail to the IRS, potentially replacing up to 125 million paper documents per year.

As a result, the IRS estimates most individual taxpayers will no longer have to send mail to the IRS, potentially replacing up to 125 million paper documents per year.

Plus, the agency says it plans to expand the option to submit forms on mobile devices. An estimated 15 percent of Americans rely solely on mobile phones for their Internet access, so this ability will let the IRS meet taxpayers where they are.

Other operating plan goals: The digital section is only one part of the 60-page (PDF version) Strategic Operating Plan update. It also looks at how the IRS wants to enhance live taxpayers assistance, simplify notices, disrupt scams, and ensure fairness in tax compliance enforcement.

Of course, all of these goals rely in large part on the IRS being able to modernize its information technology (IT) system, and expand data and analytics capabilities. And that in turn will improve IRS employees' tools and abilities to achieve these goals, which also are among the overall agency goals.

So I’m giving the full IRS 2024 SOP update this weekend’s Saturday Shout Out.

You also might find these items of interest:

• IRS Commissioner touts the tax agency's generational digital transformation
• AI will be part of expansive IRS crackdown on wealthy, corporate tax evaders
• Direct File usage exceeded expectations, but future of IRS-run free tax prep program unclear

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