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Sunday December 10, 2023

Washington News

Washington Hotline

IRS Announces Paperless Processing for 2024

On November 7, 2023, the Internal Revenue Service (IRS) announced there will be major improvements for the 2024 filing season. Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel were pleased to announce the success of the Paperless Processing Initiative.

The IRS reached the initial Paperless Processing Initiative goal three months ahead of schedule. Taxpayers can now use the Document Upload Tool to respond to all notices. The IRS explained it has received 35,000 digital responses to notices with the updated tool.

A second goal is to enable at least 94% of individual taxpayers to respond to the IRS through the website instead of sending mail. The IRS website has various forms and information, including help on preventing identity theft and assistance in qualifying for credits and deductions. This new service will allow 125 million paper documents per year to be converted to digital form.

By the start of the filing season in 2024, the IRS promises to allow e-filing of at least 20 additional tax forms. This will include various business forms, such as IRS Forms 940 and 941.

There also will be important new updates to the "Where's My Refund?" tool. This has been the most popular customer service tool on IRS.gov. Last year, over 54 million taxpayers produced 550 million hits on this tool.

The current tool provides a very basic message such as, "Your tax return is still being processed. A refund date will be provided when available. For more information about processing delays, please see our Refund Frequently Asked Questions."

The updated version will provide much more explanation. For example, it may state, "To protect you from identity theft, your tax return is currently being reviewed. To help us process your return more quickly, verify your identity and tax return information. If you recently received a letter from us, follow the instructions on the letter. Please have your tax return (Form 1040 series) available and read the website or letter before starting the verification process. If you already reviewed your identity and tax return information, you may check the status of your refund in two to three weeks."

The IRS also promised other improvements. It set a target for improved phone service to reach an 85% Level of Service next year. The average holding time target is five minutes or less. Over 95% of eligible taxpayers will be able to request a call back from the IRS. These improvements are designed to continue "to promote trust and satisfaction when taxpayers call the agency."

The IRS is continuing to make progress on Direct File. The pilot program for 2024 will be available in both English and Spanish. It is expected to be used by both low- and moderate-income taxpayers who take the standard deduction. The individuals may have W-2 wages, Social Security or Railroad Retirement benefits or interest income of less than $1,500. They will also be able to deduct educator expenses and student loan interest. More complex tax returns will need to wait for a future improved Direct File program.

The Direct File pilot will not include all state returns. However, there will be state returns for some taxpayers from Arizona, California, Massachusetts and New York. In addition, taxpayers in the nine states with no income tax will be able to use Direct File.

The IRS plan is to phase in Direct File over a number of years. This phased rollout enables the IRS to make certain that the taxpayers who use the program will receive quality service.

Published November 10, 2023
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