IRS Tax Return Filing on Track for 2025 Digitization, Official Says

The Internal Revenue Service will test its digital taxpayer system after the April 2024 tax filing, on track of the planned tax reporting and payments’ digitization starting in the 2025 tax season, IRS Commissioner Daniel Werfel said. 

The digital mode’s test will first run parallel with the IRS legacy system to address any issue, Werfel told a joint hearing of two House Oversight subcommittees on Tuesday. He said the digital upgrade of the 60-year-old IRS Individual Master File processing tax submission data is a “keystone” for the agency’s modernization, FedScoop reported.

Werfel also told the lawmakers that the agency needs a more sufficient base budget so that it will not need to realign its modernization funding.

The IRS digitization, which the agency announced in August, is being funded through a 10-year cash infusion under the Inflation Reduction Act, which President Joe Biden signed into law in 2022.

The agency said during the launch that the digitization will save up to 200 million sheets of paper annually and halve processing times, thus expediting refunds within weeks. 

The IRS initiative to go paperless will also reduce tax evasion by large companies and wealthy persons, according to a FedScoop report on the agency’s digitization launch.