What Does the IRS Modernization Plan Mean for Taxpayers?

What Does the IRS Modernization Plan Mean for Taxpayers?

After much anticipation, the Internal Revenue Service has announced its multi-year plan to improve its operations. It includes many initiatives to streamline interactions as well as strengthen its cybersecurity and technology systems. With the IRS modernization plan already underway, people are starting to see its effects. But, what else is in store? And how will these changes affect taxpayers when they take full effect?

Unveiling the Strategic Operating Plan

After months of work, the IRS revealed its Strategic Operating Plan in April. It is designed to transform the agency and improve services to both the taxpayers and the entire country. It includes 42 initiatives, 190 key projects, and an outline of how the IRS plans to deliver these transformational changes.

Utilizing funding from the Inflation Reduction Act, the IRS modernization plan will focus on updating and bolstering resources within the agency by:

    • Rebuilding customer service. Through access to online tools, greater capacity for in-person taxpayer assistance centers, and more in-house staff, they will be able to reduce the notoriously long wait times. Providing more channels of communication will also create smoother interactions and help resolve issues more quickly.
    • Improving services. Adding more customer service representatives means the IRS will be better equipped to address taxpayers’ questions, help them meet their tax obligations, and ensure they receive eligible incentives.
    • Revamping the outdated systems to modernize the information technology systems. This will provide the IRS with the latest technology, data, and analytics to make operations more efficient. In addition to building the infrastructure needed to support the tax system, it will also provide stronger cybersecurity to protect taxpayer data.
    • Adding compliance personnel. These individuals will focus on handling audits of complex filings from high-income earners, partnerships, and large corporations. With more dedicated staff, the IRS will have better resources to enforce compliance laws and go after high-dollar noncompliance filings.
    • Training a more skilled workforce. Finding ways to attract, retain, and empower a skilled workforce will expedite the transformation and deliver better results.

The Immediate Affects on Taxpayers

Although it is a multi-year plan, taxpayers are seeing the first signs of change. We already have access to more staff and digital tools to provide faster customer service and simplify interactions. Some of these tools include more features in your IRS Online Account, a modernized e-filing system, automated voice and chatbots, and customer callback options. As these automated services and online options develop further, it will create a more seamless customer service experience.

Another immediate effect of the IRS modernization plan is the focus on high-income individuals, partnerships, and large corporations. Although audits will still be conducted within all tax brackets, there will be greater emphasis on high-dollar noncompliance issues. While audit rates will remain the same for households earning less than $400,000, those over this threshold will see an increase. Greater enforcement for those not fulfilling their tax obligations will hopefully decrease our national deficit and free up funding within the federal budget.

What the IRS Modernization Means for the Future

We are just starting to feel the initial effects. However, we will certainly see a greater impact as these historic changes take hold. The ultimate goal of the IRS modernization plan is to ensure fair enforcement of tax laws through the use of updated technology and better staffing. With faster resolutions of compliance issues, the IRS hopes to close the tax gap, relieve the tax burdens on those who are struggling, and collect revenue to support our nation.

In the past, the IRS didn’t have the resources it needed to address these problems. But according to the IRS Commissioner, Danny Werfel, “Now that we have the long-term funding, the IRS has an opportunity to transform its operations and provide the service people deserve. Through both service and technology enhancements, the experience of the future will look and feel much different from the IRS of today. This plan charts the course forward for the IRS and tax administration.”

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