Taxpayers will be able to submit all types of tax documents and other digital communications to the IRS months earlier than originally planned under a new timetable for paperless communication with the taxpayer announced Tuesday by Treasury Secretary Janet Yellen.
“The impact will be significant and far-reaching,” Yellen said in a speech prepared for delivery at the IRS headquarters in Washington, “and we will speed up processing times for the system as a whole.”
The IRS survived decades of underfunding and filled with paper documents that prevent the agency from processing tax forms at a faster pace. Yellen’s speech was intended to signal that the cash infusion for the IRS in 10 years included in The Democrats’ Inflation Reduction Act working.
“Taxpayers will save time and effort,” he said, because people can start submitting their documents now, instead of waiting until the originally planned time frame of early next year.
The IRS’s plan to improve customer service for the 2024 filing season comes against the backdrop of a series of proposals by congressional Republicans to reduce its funding.
The focus Tuesday will be on what the appropriated funds are doing for taxpayers.
Under the initiative, most people will be able to submit all but their tax returns digitally by 2024. While the IRS is piloting the new electronic free file tax return system starting in 2024, the agency will process everything, including tax returns, digitally by 2025.
“The IRS will reduce errors and save costs,” Yellen said.
The processing change is expected to reduce the $40 million annually the agency spends on storing more than 1 billion historical documents. The federal tax administrator receives more than 200 million paper tax returns, forms and pieces of mail and non-tax forms each year, according to the IRS.
The improvements were announced as the agency faces yet another effort to reduce cuts.
A relief bill passed by the House on Thursday — unlikely to be approved by the Democratic-controlled Senate — would cut $14 billion from the country’s tax collector in exchange for providing aid to Israel. President Joe Biden has said he will veto the bill if it reaches his desk.
IRS cuts will cost taxpayers billions of dollars, not save money, according to independent budget analysts.
Yellen said on CNN last week that tying aid to Israel to the IRS cuts was “irresponsible.”