Janet Yellen says IRS tax changes coming to paying online

Treasury Secretary Janet Yellen announced a timeline update on an IRS plan that will allow American taxpayers to submit paperwork and documents digitally.

Described this summer as the “paperless processing initiative,” the plan for the Internal Revenue Service to go completely paperless by 2025 is not only on track but ahead of schedule, thanks to the Democrats’ Inflation Reduction Act. Yellen spoke of the updated timetable in remarks prepared for a speech at IRS headquarters in Washington, D.C.

“The impact will be significant and far-reaching,” Yellen says, according to the Associated Press, “and we’ll speed up processing times for the system as a whole.”

“Taxpayers will save time and effort,” Yellen added, as the original time frame for next year is accelerated and taxpayers can already begin to submit their documents.

“Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap,” the agency announced last month in a nod to the Inflation Reduction Act that Democrats rammed through Congress.

In a pilot program that would enable taxpayers in 2024 to e-file their returns directly to the government for free, the plan was to be able to process tax returns and everything else digitally by 2025.

“The IRS will reduce errors and storage costs,” according to Yellen.

The Associated Press reported:

The processing change is expected to cut back on the $40 million per year that the agency spends storing more than 1 billion historical documents. The federal tax administrator receives more than 200 million paper tax returns, forms and pieces of mail and non-tax forms annually, according to the IRS.

The improvements are being announced as the agency faces yet another effort to exact cuts.

An aid bill that passed the House on Thursday — unlikely to be approved by the Democratic-controlled Senate — would cut $14 billion from the nation’s tax collector in exchange for providing assistance to Israel. President Joe Biden has said he would veto the bill if it reaches his desk.


In addition, the IRS noted late last month that electronic signatures will be allowed on some tax forms “indefinitely until more robust technical solutions are deployed.”

Treasury’s Chief Implementation Officer Laurel Blatchford noted earlier this year that the proposed e-file program “could potentially save taxpayers billions of dollars annually.”

But critics like Steve Ryan, general counsel of the American Coalition for Taxpayer Rights, said “a direct e-file system is unnecessary, costly and will divert attention and resources from more pressing priorities at IRS.”

Others have noted that an overhaul of the tax system to simplify it for all users is long overdue.


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Frieda Powers


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