The IRS has recently released an update to its Strategic Operating Plan, outlining its future priorities and highlighting its accelerated transformation efforts following numerous successes for taxpayers. This update reflects the agency’s commitment to enhancing taxpayer services, modernizing its infrastructure, and improving compliance and enforcement activities. Optima Tax Relief reviews the key highlights of the announcement.
Enhanced Taxpayer Services
The IRS is committed to enhancing taxpayer services by expanding and improving digital tools and resources. For example, the IRS enhanced live assistance for taxpayers. In 2024, they answered over one million more calls than last year. In addition, the average call wait time was cut by an average of 25 minutes.
Moreover, the IRS has enhanced the “Where’s My Refund?” tool, making it easier for taxpayers to check the status of their refunds online. This tool now provides more detailed information about the stages of refund processing, which helps taxpayers understand where their money is and when they can expect it. The upgraded tool was used 30% more than last year, which further helps decrease the number of calls the IRS receives for an update on tax refund statuses.
The agency notably launched IRS Direct File, a pilot free tax-filing program that was available in 12 states in 2024. More than 140,000 tax returns were submitted through Direct File. The IRS is currently reviewing feedback from the pilot program to enhance and expand it.
Modernization of Technology
The IRS has improved their digitalization. Now, nearly every taxpayer can interact with the IRS online if that’s their preference. They can complete several actions on their Individual Online Accounts. In addition, the IRS has introduced Business Tax Accounts for small business owners and new voicebots that help taxpayers with some inquiries, like obtaining tax transcripts.
Thanks to the Inflation Reduction Act funding, the IRS has been able to modernize their foundational IT systems to make improvements possible. In addition, they have improved employee productivity with new technology. One example of this is the replacement of the decades-old mail sorting machines.
Improved Compliance and Enforcement
To address the tax gap, the IRS is leveraging advanced analytics and data matching techniques to identify non-compliance more effectively. For instance, the agency uses machine learning algorithms to detect patterns of tax evasion and fraud. This allows the IRS to target its enforcement efforts more precisely, focusing on areas with the highest risk of non-compliance.
One specific example of improved enforcement is the IRS’s increased scrutiny of high-income and high-wealth individuals who have not filed or not paid their taxes. They are also looking more closely at corporations that are not compliant.
The IRS is enhancing its audit capabilities by employing data analytics to select cases with a higher likelihood of discrepancies. This targeted approach increases the effectiveness of audits and reduces the burden on compliant taxpayers.
Future Outlook
Looking ahead, the IRS plans to continue its transformation with a focus on innovation and taxpayer-centric services. IRS Commissioner Danny Werfel stressed the importance of the Inflation Reduction Act funding in future IRS operations. Not only will it allow the agency to service the needs of taxpayers, but it has the potential to generate over $340 billion over a decade. By maintaining its focus on these strategic priorities, the IRS aims to build a more efficient, transparent, and fair tax administration system that better serves the needs of all taxpayers.
