Published: August 27, 2024 | Last Updated: November 25, 2025

Modernize IRS Processing to Increase Efficiency and Improve the Taxpayer Experience.

Background

Hundreds of millions of taxpayers file their tax returns with the IRS annually. For many Americans, it is the only experience they have with the IRS, so providing efficient filing and processing systems is paramount to effective tax administration. The effects of paper processing ripple throughout the IRS, decreasing administrative efficiency and increasing taxpayer burden. Paper processing not only creates backlogs in the processing of mailed tax forms and correspondence, but it also negatively impacts elements of the taxpayer experience, including telephone line wait times, timeliness of refunds, and document storage costs. The IRS Paperless Processing Initiative seeks to mitigate the impacts of paper submissions and reduce the burden of paper filing on taxpayers. As part of the initiative, the IRS launched the Document Upload Tool (DUT), which allows taxpayers to securely upload documents to the IRS but still requires the IRS to manually process on the back end. The initiative has set an ambitious goal to accomplish paperless processing (scanning and digitalization) of all tax and information returns by the 2025 filing season.

Highlights

Status

Expected Completion Date

09/30/2025

Activities

Activity 1: Monitor the IRS implementation of the Paperless Processing Initiative, including scanning technology and digitalization to process paper-filed IRS forms and correspondence and the expansion of electronic filing eligible tax forms, and make administrative recommendations as needed to minimize taxpayer burden.

Activity 2: Provide recommendations to allow perfection of electronically filed tax returns rejected solely based on electronic filing criteria and the creation of an appropriate treatment stream for resolving discrepancies.

Activity 3: Monitor the inventory and processing of amended returns, including ERC claims, and provide recommendations to improve the processing timeframe and transparency about the length of time and reasons for delays.

1st Quarter Actions Completed

These activities will begin in the 2nd quarter of FY 2025 with the opening of the 2025 Filing season.

2nd Quarter Actions Completed

TAS is monitoring IRS’s response to a TIGTA audit. TIGTA recommended that the IRS evaluate the efforts to digitize the processing of paper filed individual tax returns during Processing Year 2024. TAS monitored the IRS’s electronically filed returns process during the 2025 Filing Season. TAS held conversations with the IRS regarding the Form 1040-X, Amended U.S. Individual Tax Return, automation process. TAS will continue to monitor the IRS’s 1040-X ‘Non-Complex’ Amended Returns Processing Automations Initiative (UITP).

3rd Quarter Actions Completed

TAS recommended that the IRS determine which forms and publications are most used by taxpayers living abroad. Additionally, TAS advised the IRS to assess whether this population should be classified as limited English proficiency and to identify which languages are relevant to better customize language services and initiatives. The Withholding, Exchange, and International Individual Compliance Practice Area is currently reviewing whether it has the necessary resources to carry out this study and support the recommendation.
TAS Actively participated in data-gathering efforts to ensure taxpayers living abroad are given enough time to respond to IRS correspondence. Additionally, TAS reviewed the Internal Revenue Manual provisions through the Internal Management Document process to support this work.

TAS is actively reviewing the IRS’s FAQs related to international tax issues for U.S. Taxpayers living abroad. This work is ongoing, with TAS evaluating the content and identifying opportunities to recommend improvements that would make the information clearer and more helpful for taxpayers overseas.

Activity Update

TAS interviewed stakeholders and representatives of international taxpayers while conducting research and reviews for the 2024 Most Serious Problem (MSP) “Civil Penalty Administration” and “Criminal Voluntary Disclosure”. The feedback received was included in the 2024 MSPs. Recommend activity be closed.

TAS monitored the IRS’s electronically filed returns process post filing season for issues and advancements.

TAS monitored the automation process of the Form 1040-X, Amended U.S. Individual Tax Return. The IRS is working to resolve barriers in the automation process.

Next Steps

TAS will continue to work with the IRS to identify which IRS forms and publications individual taxpayers abroad use most. TAS will evaluate the content and identifying opportunities to recommend improvements that would make the information clearer and more helpful for taxpayers overseas.

Return to FY25 Objective Statuses