Was all the money worth it?
A year into its modernization efforts funded by tens of billions of dollars from the Inflation Reduction Act, the Internal Revenue Service is claiming "significant progress" toward improving service, upgrading technology and going after high-income taxpayers.
For example, the agency said in a report to mark the IRA's one-year anniversary that it met targets to improve its customer callback option, which will now also be available for up to 95% of callers seeking live assistance. The option was added to an additional 73 toll-free applications, bringing the total number with the option to 116.
During filing season last spring, the IRS claims it achieved an 87% level of service on its main taxpayer help line.
Through the end of the season the agency answered 3 million more calls; cut phone wait times to three minutes from 28; served 140,000 more taxpayers in-person; digitized 80 times more returns than in 2022 through the adoption of new scanning technology; cleared the backlog of unprocessed 2022 individual tax returns with no errors; launched two new digital tools; and enabled a new direct-deposit refund option for taxpayers with amended returns.
The Paperless Processing Initiative aims to ensure that, by filing season next year, taxpayers will be able to go paperless and to achieve paperless processing by digitizing all paper-filed returns when received by the 2025 filing season.
The agency claims that the initiative now aims to scan 225 times more forms than in 2022 and enable taxpayers to reply to an additional 51 forms and letters online. During the 2023 filing season, IRS launched an online portal to allow businesses to e-file the 1099 series information returns.
The IRS has scanned about 849,000 forms this year, including about 481,400 Forms 940, 304,000 Forms 941 and 64,000 Forms 1040. This is 225 times more forms than were scanned in the previous year.
Taxpayers are now able to respond to notices online and have new online filing options. Until Filing Season 2023, when taxpayers received notices for things like document verification, they had to respond through the mail. During the 2023 filing season, taxpayers were able to respond to 10 of the most common notices for credits like the Earned Income Tax Credit and the Health Insurance Tax Credit online, saving them time and money.
The service is now providing this capability to an additional 51 notices and letters that it sends out, which will be updated with instructions on how to use the appropriate upload tool.
Among other claims of improvement:
1. Voice and chatbots: This new technology was added to help taxpayers with a range of issues, including securing account transcripts, getting answers to questions about balances due and getting help from the Taxpayer Advocate Service. (During business hours, many of the IRS voice and chatbots provide an option to connect with live help.) The IRS has nine taxpayer-facing voicebots today, in addition to 10 chatbots.
Taxpayers with balances due have messaged online with Collection chatbots more than 1.6 million times. More than 13 million taxpayers have successfully called in and gotten information through bots, and nearly 24,000 payment plans have been established via bots for a total of over $152 million in projected revenue at a project cost of $13 million.
2. Direct deposit refund option for 1040X: These refunds were previously only available by paper check.
3. In-person service: The IRS hired nearly 700 employees to
4. High-income tax cheats: In recent months, IRS Criminal Investigation has closed a lengthy list of cases in which wealthy taxpayers have been sentenced for tax evasion, money laundering and filing false returns. The agency also closed about 175 delinquent tax cases for millionaires, generating $38 million in recoveries.
