IRS kicks off tax season with extended hours, service and tools

The Internal Revenue Service began accepting tax returns Monday, promising improved help to taxpayers and new resources both in-person and online.

The IRS anticipates it will receive over 146 million individual tax returns by the April 15, 2024, deadline. The agency is using some of its extra funding from the Inflation Reduction Act to extend the hours of service at nearly 250 of its in-person Taxpayer Assistance Centers around the country. It's also working to continue improvements to its phone service as well as online tools like "Where's My Refund?" where the website will provide more details for taxpayers checking on the status of their tax refund. However, the agency faces some challenges with a tax extenders bill working its way through Congress that would make changes in the Child Tax Credit, disaster relief and a number of business-related tax provisions. 

"The start of a tax season is an important day for the nation and for the IRS," said IRS Commissioner Danny Werfel during a press conference Friday. "Behind the scenes at the IRS, we've been working for months to be ready to help taxpayers and make the process of filing taxes as easy and smooth as possible. It takes many long months of planning and preparing as well as programming and testing to get to the opening of filing season. This is a big job, but it's a critical one for the nation. Tax season is a unique right of citizenship."

Samuel Corum/Bloomberg

He anticipates the IRS will issue more than $300 billion in refunds this year.

"Last year, the average refund came in at more than $3,100," he said. "That's a lot of money, and for many people, this will be the biggest check they see all year, so it's important for the IRS to get it right."

As the IRS tries to avoid further funding cuts at the hands of Congress, the agency is pointing to the improvements made with the extra money from the IRA. Congress has already reduced the extra $80 billion in funding over 10 years by about $20 billion as part of a deal to avoid a default on the debt, and those cuts could be accelerated or increased as part of a budget agreement.

"The IRS is building on the improvements made last year," said Werfel. "We did much better in 2023 than we did in 2022 or the previous years, thanks to the additional resources provided under the Inflation Reduction Act. The difference a well-funded IRS makes for taxpayers is like night and day. We are accelerating our transformation work and we are trying to deliver another strong tax season for the nation. The new funding is driving change across the IRS and taxpayers will see this at work in the months ahead at the IRS. We all know we need to do more to help taxpayers. This year will be another step in that journey."

Accounting Today asked Werfel if the IRS is ready for any changes from Congress in the tax extenders legislation if the bill is passed in the middle of tax season. 

"Going back many, many years, there have been times like this, where Congress is considering changes to the Tax Code, either right before filing season or right after filing season begins," Werfel responded. "Fortunately, the IRS has deep experience assessing and reviewing these types of packages, and then quickly updating our operations to implement them. And that's what we're doing this cycle. We have communicated based on the latest versions of the bill that have been published, that we can and will implement these tax provisions within weeks after they're enacted."

He later added in answer to another question that taxpayers shouldn't wait to file until Congress decides what to do. The IRS will take care of any changes. "We urge and encourage taxpayers to file when they're ready," said Werfel. "Don't wait on Congress. If there's a change that impacts your return, we will make the change and we will send you the update, whether it's an additional refund or otherwise, without you having to take any steps."

Werfel promised that taxpayers would see continuing improvements in IRS performance on the phones, as the agency aims for an 85% level of service on its main phone line. "If the phones are busy, we have more callback options for taxpayers when the wait time exceeds 15 minutes, so people will hear a lot less elevator music," said Werfel. 

He noted that the agency has expanded its in-person help, having opened or reopened 50 Taxpayer Assistance Centers since the IRA funding was approved in 2022. The IRS has also advanced its Paperless Processing Initiative. Taxpayers can now electronically file nine more forms, with 11 more planned for tax season. Amendments to the 94X forms — some of the most common forms businesses file when amending returns — will be included in these updates. In all, 20 new forms will be available, and the changes will enable up to 4 million additional tax documents to be digitally filed every year. Last November, the IRS met the first goal of the Paperless Processing Initiative: Taxpayers can now digitally submit all correspondence and responses to notices.

The IRS has also updated "Where's My Refund?" to allow taxpayers to view more detailed refund status messages in plain language. The updates will also help the tool work more smoothly on mobile devices. Instead of a generic message saying their returns are still being processed and to check back later, the improved tool will provide clearer, more detailed updates, including whether the IRS needs the taxpayer to respond to a letter requesting additional information. The new updates aim to reduce the need for taxpayers to call the IRS for answers to basic questions, and include voice bot technology.

In 2022, 54 million unique taxpayers used the Where's My Refund tool.

"That is 16% of the U.S. population," said Laurel Blatchford, chief implementation officer for the IRA at the Treasury Department. "Given the demands for this tool, we've invested in improvements. This filing season, 'Where's My Refund?' will incorporate conversational voice bot technology to help taxpayers get answers more quickly, and it will provide clearer and more detailed information so taxpayers can address barriers to processing their returns, and quickly receive the response. Additional improvements in the tool are planned for subsequent filing seasons."

Last February, the IRS introduced the ability to submit nine notices through the Document Upload Tool. Before last filing season, taxpayers could only submit these documents through the mail. The agency achieved the ability to digitally respond to all notices in eight months. As of Jan. 24, 2024, it has received over 49,000 responses to notices via the online tool, and as a result, it estimates that more than 94% of individual taxpayers will no longer have to send mail to the IRS. Taxpayers can use the forms to request or submit information on a variety of topics, including identity theft and proof of eligibility for key credits and deductions to help working Americans. Reaching that milestone will allow up to 125 million paper documents per year to be submitted digitally. Taxpayers who want to submit paper returns and correspondence can still do so.

"These initiatives show how we are approaching modernization in a comprehensive way, addressing all of the obstacles taxpayers face, whether it's complex and unclear notices, or the inability to respond to notices online," said Blatchford. "These customer service improvements and technology upgrades are only possible because the IRS has resources after decades of underfunding. Delivering the service American taxpayers deserve, whether this filing season or in future filing season years from now, requires annual and long-term funding working in concert, and it is essential that Congress provide the annual support the IRS needs to deliver for the American people."