Next filing season, the majority of taxpayers will be able to electronically submit a variety of tax-related paperwork and other communications to the IRS, as the agency seeks to go completely paperless by 2025.
Treasury Secretary Janet Yellen as well as IRS Commissioner Daniel Werfel unveiled the “paperless processing initiative” on Wednesday in a move to reduce the agency’s exorbitant administrative burden.
In 2024, under the initiative, the majority of individuals will have the ability to submit all documents except tax returns digitally.
In addition, by 2025, the IRS will be able to process everything digitally, including tax returns, once it begins testing its new electronic free file tax return system in 2024.
The processing adjustment is anticipated to reduce the agency’s annual storage costs of over one billion historical documents by $40 million.
According to the IRS, the federal tax administrator gets more than 200 million paper tax returns, forms, items of mail, and non-tax forms annually.Based on IRS data, approximately 213.4 million tax returns and other forms were submitted electronically in fiscal year 2022, representing 81.2% of all filings.
In addition to decades of inadequate funding, an abundance of paper documents kept the agency from processing tax forms at a faster rate in the past, according to agency administrators.
Based on the IRS, the new initiative should enable the agency to expedite refunds by several weeks.
IRS Digital Upgrade Save Millions of Paper
The Internal Revenue Service estimates that its digital enhancements will save 200 million pieces of paper annually.
The anti-paperwork initiative is supported by the Inflation Reduction Act of 2022, which raised the tax agency’s budget by $80 billion over ten years.
Congress approved the additional funding after the agency was practically buried in documents due to the disruption of normal operations caused by the pandemic.
The Internal Revenue Service began 2022 with a backlog of 4,7 million individual tax returns as well as millions more business tax returns, but has since caught up on all error-free returns.
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