It’s official: the IRS is going paperless. In the not-too-distant future, mailing in your taxes will be a thing of the past, and all tax returns will be processed electronically. Here’s what you need to know.
How is this possible?
As part of the 2022 Inflation Reduction Act (IRA), the IRS received increased funding, and it plans to use some of that funding to go paperless.
Do I have to go paperless?
By the 2025 tax season, you’ll have the option to file your taxes electronically—but that doesn’t mean you have to. Any taxpayers who still want to use paper returns are welcome to. But once the IRS receives the returns, they’ll be digitized and processed electronically.
Doesn’t the IRS already scan documents and process them digitally?
It’s true that the IRS has been scanning documents piecemeal for over 35 years now, but with the increased funding from the IRA, the agency is working on new technology that will help them do more comprehensive document scanning.
Why is the IRS going paperless?
Right now, the IRS gets about 76 million paper returns and 125 million paper pieces of correspondence each year. The ability to process all that information digitally will speed up the agency’s operations and allow them to get through all those piles of paper in a more timely manner.
As well as speeding up the tax return and refund process, going paperless will help:
- Eliminate errors that happen when taxpayers manually fill out paper tax returns
- Reduce the IRS’ amount of physical storage
- Increase the IRS’ focus on customer service, rather than processing
- Give IRS customer service employees faster, easier access to taxpayer information
- Make it easier to single out wealthy corporations and individuals who are evading taxes
What will the 2024 tax season look like?
According to the IRS, taxpayers should be able to submit all correspondence, including notice responses and non-tax forms, digitally by the 2024 tax filing season. This should eliminate the need for at least 94% of taxpayers to send paper forms to the IRS through the mail.
By the 2024 tax season, taxpayers will also be able to e-file at least 20 of the most commonly used tax forms, including:
- Form 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return
- Form 941: Employer’s QUARTERLY Federal Tax Return
- Form 941 (PR): Employer’s Quarterly Federal Tax Return (Puerto Rican Version)
These forms will be available in digital and mobile-friendly formats that will be easy to fill out and submit.
What will the 2025 tax season look like?
By the 2025 tax season, the IRS will make 150 more non-tax forms available in digital, mobile-friendly formats. It will also be able to process all paper returns digitally, which should reduce processing times by 50% and improve customer service. Additionally, by the 2025 tax season, half of all paper correspondence, non-tax forms, and notice responses will be processed digitally.
What will the future of the IRS look like?
The IRS aims to have all paper documents processed digitally by the 2026 tax season. It will also digitize more than 1 billion historical documents to help with customer service and give taxpayers easier access to their past data. Digitizing these historical documents should save the IRS around $40 million per year in storage costs. We can see why they want to go paperless!