Two years in: IRS highlights improvements made under Inflation Reduction Act

The Internal Revenue Service announced the progress and improvements made to taxpayer service in the two years since the enactment of the Inflation Reduction Act, noting that taxpayers can now conduct all interactions with the IRS digitally and that the service is better equipped to address tax evasion and scams.

The IRS also mentioned those choosing to interact with the service in person can do so more quickly.

“Two years into the historic work made possible by the Inflation Reduction Act, the IRS has made significant progress in the 10-year journey to improve taxpayer service, upgrade technology and ensure more fairness in compliance efforts,” said IRS Commissioner Danny Werfel in a statement. “If the IRS continues on this trajectory, we will meet a generational imperative on several fronts. This work will enable all taxpayers to complete all interactions with the IRS digitally if they choose. The IRS will be better equipped to disrupt tax scams and provide immediate and comprehensive victim support when scams occur. We will complete and sustain new solutions for protecting taxpayer data from unauthorized access and disclosure. And we will put in place increasingly accurate audit selection methods that hold accountable those taxpayers who use complex financial maneuvers to shield income while avoiding burdening those taxpayers who play by the rules.”

Through the end of July, the IRS had offered callback options to more than 11 million taxpayers this tax season, which the service noted saved the taxpayers 3.3 million hours of wait time on the phone. 

The IRS also expanded in-person service to rural, underserved taxpayers, improving service at Taxpayer Assistance Centers across the country, the IRS said, resulting in 11,000 extra service hours during the 2024 filing season. 

Additionally, the IRS estimates more than 94% of taxpayers will no longer have to send mail to the IRS with the implementation of the digital capability for taxpayers to submit all correspondence. The service has also replaced outdated scanning equipment, and made more forms eligible for filing electronically and via mobile device.

The IRS also stepped up awareness efforts, with the service sending over 1.8 million reminder letters to individuals who received the advanced Child Tax Credit but did not file a 2021 return and could be eligible to claim the other 50% of the expanded Child Tax Credit. And earlier this year, it launched a new annual Tax Professional Awareness initiative to educate tax professionals on refundable credit eligibility requirements.

In this two-year report card, the IRS also highlighted the simplification of notices and letters sent annually to taxpayers, and the improved service this past filing season.

The IRS’s main phone line service reached more than 88% during the 2024 filing season, the IRS said, above the 87% level of last year and more than a five-fold increase from the phone service levels during the pandemic era.

Additionally, the IRS said more than $1 billion was protected by its efforts to halt scammers targeting the Employee Retention Credit, which included enhanced compliance reviews, withdrawal options for small-business owners misled by ERC marketers or promoters, partnering up with the Department of Veterans Affairs to support the disruption of tax scams that specifically target U.S. military veterans, and warning letters to taxpayers suspected of scamming taxpayers. On Aug. 16, the IRS announced the formation of the Coalition Against Scam and Scheme Threats, representing IRS, state tax agencies and other members of the tax industry. 

Noting that prior to the Inflation Reduction Act, budget cuts prevented the IRS from keeping up with the complexity of devices taxpayers use to hide income and evade paying taxes, the “IRS is now taking swift and aggressive action to close this gap,” according to the service.

The IRS has also increased efforts to pursue high-income, high-wealth individuals who have not paid their tax bills.

“While much more work remains for the IRS to get where it needs to be, there should be no doubt the agency has accomplished many things during the past two years,” Werfel said in a statement. “These efforts to serve taxpayers and improve tax administration will continue to intensify and accelerate in upcoming months and into the future.”