IRS to Go Paperless in Coming Years to Improve Customer Service

The IRS is ending its reliance on paper for digital processes in an effort to improve customer service with tax filings. 

Starting during next year’s tax filing season, users will have the option to go paperless when communicating with the IRS. In 2025, the agency also plans on achieving paperless processing for all tax returns. “In effect, this means all paper will be converted into digital form as soon as it arrives at the IRS,” according to the agency, which says this could speed up taxpayer refunds by “several weeks.”

“Paper-based processes have long hampered the IRS and frustrated taxpayers,” the agency adds in today’s announcement(Opens in a new window). Although you can submit an annual tax return digitally, the same can’t be said for other forms and correspondence with the IRS. 

The paper-based approach has slowed down IRS processing times when the agency receives “about 76 million paper tax returns and forms, and 125 million pieces of correspondence, notice responses, and non-tax forms each year,” it says.

(Credit: Getty Images)

“For decades, taxpayers had to respond to notices for things like document verification through the mail, and IRS employees had to manually enter numbers from paper returns into computers one digit at a time, creating significant delays for taxpayers and challenges for IRS staff,” the agency says. On top of all this, the IRS has over 1 billion historical documents, which cost $40 million per year to store. 

So in some good news, the agency has started transitioning to more IT services due to $80 billion in funding from the Inflation Reduction Act. The modernization effort means by next year  “more than 94% of individual taxpayers will no longer ever need to send mail to the IRS.” The agency will also proceed to digitize the 1 billion plus historical documents. 

That said, the IRS says: “Taxpayers who want to submit paper returns and correspondence can continue to do so,” even with the upcoming changes, which will include rolling out smartphone-friendly formats for IRS-related forms. To process paper-based returns, the IRS is signaling it’ll use technology that can automatically convert the documents into a digital format, removing the need for a worker to manually input the data.

In responses, US Sen. Ron Wyden (D-Ore.) praised the Inflation Reduction Act while taking(Opens in a new window) a shot at Republicans for allegedly trying to deprive the IRS of funding. The modernization effort also occurs as the IRS is preparing to test a free, tax-filing option to a small group of users next year, setting up potential competition with paid tax software such as TurboTax.