The IRS released a report card highlighting significant improvements made in the second year of funding from the Inflation Reduction Act. The report showcases advancements in taxpayer service, technology upgrades, and compliance efforts. Other achievements include increased electronic filing and scanning capabilities, enhanced efforts to disrupt tax scams, and focusing on tax compliance for certain individuals and businesses. (IR 2024-223, 8/23/2024)
“Two years into the historic work made possible by the Inflation Reduction Act, the IRS has made significant progress in the 10-year journey to improve taxpayer service, upgrade technology and ensure more fairness in compliance efforts,” said IRS Commissioner Danny Werfel.
Increased e-filing/scanning.
The IRS has made significant strides in digitizing its operations and improving accessibility for taxpayers. Through the implementation of the Document Upload Tool, an estimated 94% of individual taxpayers can now submit correspondence online, potentially eliminating up to 125 million paper documents annually. The agency has also upgraded its scanning equipment, installed automated mail-sorters, and scanned over 11.8 million pieces of paper by the end of June.
Additionally, the IRS has expanded electronic filing options, making 23 more forms eligible and introducing 30 forms for mobile use, including employment tax forms like Form 940 and Form 941.
Disrupting tax scams.
The IRS protected over $1 billion through efforts to disrupt scammers targeting the Employee Retention Credit (ERC). A moratorium on processing new ERC claims was announced in September 2023 to combat fraud. The agency offered a withdrawal option for small business owners misled into filing ineligible ERC claims. The Coalition Against Scam and Scheme Threats was also formed to expand outreach and develop new approaches to identify fraudulent returns.
Increased compliance efforts.
The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay tax bills, collecting over $1 billion so far. A new initiative focused on high-income non-filers, targeting over 125,000 instances of unfiled returns since 2017. The IRS’ Strategic Operating Plan mentioned that the increased areas of enforcement includes areas where audit coverage declined, including employment taxes.
Other notable advancements.
The IRS level of service on main phone lines reached over 88% during the 2024 filing season, with average wait times reduced to just over three minutes. The IRS is working on simplifying notices and letters sent to taxpayers, with plans to redesign up to 200 notices for the 2025 filing season. In addition, the IRS is investing in cutting-edge technology and data analytics to operate more effectively and modernize legacy IT systems.
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