Published: August 27, 2024 | Last Updated: February 3, 2026

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

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.

Activity Update

Activity 1: TAS monitored the IRS scanning process’s target goal of 99.9% digitization of filed tax and information returns through the 2025 Filing Season. The IRS continued its digitalization and plans to hire more staff to assist with these efforts. The IRS is discussing alternatives to address roadblocks, and expects to see additional progress by January 2026. This activity is being closed and all FY2026 actions will be tracked under the new FY2026 Systemic Advocacy Objective which aligns to these efforts.

Activity 2: The IRS is making it easier for taxpayers to protect their information and avoid refund delays, by accepting certain e-filed tax returns that claim dependents who have already been claimed on another taxpayer’s return. This change will benefit filers claiming important tax credits like the Earned Income Tax Credit and Child Tax Credit. Implementation is in effect. This activity is being closed as completed.

Activity 3: N/A

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.

4th Quarter Actions Completed

TAS monitored the IRS scanning process’s target goal of 99.9% digitization of filed tax and information returns through the 2025 Filing Season. The IRS continued its digitalization and plans to hire more staff to assist with these efforts. The IRS is discussing alternatives to address roadblocks, and expects to see additional progress by January 2026. TAS will continue to monitor this activity.
The IRS is making it easier for taxpayers to protect their information and avoid refund delays, by accepting certain e-filed tax returns that claim dependents who have already been claimed on another taxpayer’s return. This change will benefit filers claiming important tax credits like the Earned Income Tax Credit and Child Tax Credit. Implementation is in effect. TAS monitored the automation process of the Form 1040-X, Amended U.S. Individual Tax Return. The 1040-X Automation launched on July 28, 2025, and the first automated adjustments occurred shortly thereafter. The automation processed certain adjustments on tax year 2023 and 2024 amended returns. Recommend this objective be closed as completed.

Return to FY26 Objective Statuses