The Paperless Processing Initiative
The IRS Paperless Correspondence Initiative is a strategic move aimed at reducing the reliance on paper documents and promoting a more streamlined, secure, and technologically advanced system for sending out IRS correspondence. Currently, taxpayers must respond to IRS notices through mail which creates a burden for the taxpayer. On the other side of the aisle, IRS employees must then manually enter taxpayer information into computers, which creates significant delays for IRS staff.
Every year, the IRS receives 76 million paper returns and 125 million pieces of mail, including notice responses and non-tax forms. On top of that, the IRS currently stores over 1 billion historical documents, which costs the agency $40 million each year. Using Inflation Reduction Act resources, the IRS is able to fast-track their efforts to modernize their technology and processes. By 2024, taxpayers should be able to opt in for paperless correspondence. The agency is also hoping to go paperless when digitizing paper-filed tax returns.
The initiative encompasses several key objectives:
- Efficiency Enhancement: By eliminating the need for paper documents, the IRS aims to expedite its processing procedures, reducing the time required for document handling, data entry, and communication.
- Cost Reduction: Moving away from paper-based processes can significantly reduce costs associated with printing, postage, and physical storage of documents.
- Accessibility and Convenience: A digital approach makes it easier for taxpayers, tax professionals, and other stakeholders to access and submit documents electronically, facilitating a more user-friendly experience.
- Security Enhancement: Digital processing can enhance data security, mitigating risks associated with physical document loss, tampering, and unauthorized access.
Implementation and Support
The IRS has put in place mechanisms to facilitate the transition to paperless processing. Taxpayers and tax professionals can make use of secure online portals and electronic communication channels to submit documents, receive notifications, and interact with the IRS electronically.
By filing season 2024, taxpayers will be able to digitally submit all correspondence and e-file 20 additional tax forms. In addition, 20 of the most common non-tax forms will be available for digital filing. By filing season 2025, the IRS plans to add an additional 150 of the most used non-tax forms. They also plan to digitally process all paper-filed returns, including information returns. The IRS hopes to digitize the 1 billion+ historical documents, which will not only save $40 million a year but will also give taxpayers access to their own data. Finally, half of the paper-submitted correspondence, non-tax forms and notice responses will be digitally processed, with the expectation that all correspondence will be digitally processed by filing season 2026.
Impact on Taxpayers and Professionals
Taxpayers and tax professionals stand to benefit in various ways:
- Faster Processing: Electronic document submission can expedite the processing of tax-related requests, leading to quicker resolution and responses from the IRS.
- Reduced Paperwork: Taxpayers can enjoy a reduction in paperwork, eliminating the need to physically mail or fax documents to the IRS.
- Real-time Updates: Electronic filing allows for real-time tracking and updates on the status of submitted documents.
- Environmental Benefits: The shift to digital processes supports environmental sustainability by reducing paper consumption and the carbon footprint associated with paper production and transportation.
The IRS Paperless Processing Initiative marks a significant step towards embracing digital transformation, fostering efficiency, accessibility, and sustainability in its operations. As the IRS continues to modernize its processes, taxpayers can look forward to a more streamlined and user-friendly experience while contributing to a greener and more sustainable future.