# Internal Revenue Service > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A977c2106ab19591f ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Internal Revenue Service Inflation Reduction Act Strategic Operating Plan FY2023 – 2031 This page intentionally left blank The IRS mission statement “Provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.” IRS IRA Strategic Operating Plan 1 APRIL 5, 2023 MEMORANDUM FOR SECRETARY YELLEN FROM: Daniel I. Werfel, Commissioner of Internal Revenue SUBJECT: IRS Inflation Reduction Act Strategic Operating Plan I am pleased to transmit the IRS Inflation Reduction Act Strategic Operating Plan. In my short time as IRS Commissioner, I am already impressed with the dedication of the IRS workforce and the progress the agency has been making in delivering for the American people. I hope that through some of our recent efforts, such as an improved filing season this year and delivery of Economic Impact Payments during the pandemic, taxpayers see how our workforce makes a difference for the nation. We can do even more to deliver for taxpayers when sufficient resources are provided to the IRS. The Plan is structured to achieve five objectives, which will be accomplished through a series of initiatives and projects aligned to each. 1. Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible 2. Quickly resolve taxpayer issues when they arise 3. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap 4. Deliver cutting-edge technology, data, and analytics to operate more effectively 5. Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers Taken as a whole, the contents of the Plan provide a vision for the future of Federal tax administration, which can be summarized as follows: • A world class customer service operation where taxpayers can engage with the IRS in a fully digital manner if they choose, where helpful tools for taxpayers to navigate the complexity of our tax laws are deployed and then refreshed and updated regularly based on taxpayer feedback, and where our customer service workforce is maintained at the right size and with the right resources and training to always be ready to meet the taxpayer demand for assistance. • New capacities, including specialized skills, in place to unpack the complex filings of high income taxpayers and large corporations and partnerships so Americans have confidence that all taxpayers, regardless of means, are doing their part to meet their responsibilities under our tax laws. • An organization and infrastructure rooted in modern technology that provides taxpayers increased confidence that data is secure and that we are prepared to more rapidly meet new requirements or responsibilities that may emerge in the future. We will hold ourselves to achieving the Plan vision by regularly monitoring and reporting to Congress on our progress. We will also update the Plan details as we learn more about what works and as the 2 IRS IRA Strategic Operating Plan operating environment changes. More important than any detail in this Plan, however, is our responsibility to improve the customer experience we provide to the American people. The IRS looks forward to demonstrating how the actions under this Plan will translate into real improvements in how taxpayers engage with us and in the assistance we provide. The Plan articulates how, through both service and technology enhancements, the experience of the future will look and feel much different from the IRS of today. Ensuring taxpayers file accurate returns and pay the taxes they owe is another important component of this Plan. For the first time, we will help taxpayers identify potential mistakes before filing and quickly fix errors that delay their refunds. We will focus IRA enforcement resources on hiring the accountants, attorneys, and data scientists needed to pursue high-income and high-wealth individuals, complex partnerships, and large corporations that are not paying the taxes they owe. All efforts will comply with your directive not to use IRA resources to raise audit rates on small businesses and households making under $400,000 per year, relative to historic levels. Our efforts outlined in the Plan to provide better service to taxpayers, help them file accurately and resolve issues at filing, coupled with technology and data advances, will allow us to focus enforcement on taxpayers trying to avoid taxes, rather than taxpayers trying to pay what they owe. I can’t overstate the importance of sustained annual resources for IRS operating costs. To help put this issue in perspective, IRS funding has steadily declined over the last decade causing suboptimal staffing and investment. In 2010, for example, we operated with 95,370 FTE to meet the demands of the U.S. population (310 million). Today, the IRS is almost 20 percent smaller (80,006 FTE as of the end of FY 2022), whereas the U.S. population has increased by over 7 percent (334 million) and the tax law has grown more complex. To cover steady state operations, annual discretionary appropriations must be fully maintained at the FY 2022 level, including growth for inflation and pay raises. Any reduction in annual discretionary funds – including not providing for inflationary increases to maintain current levels – will require IRA funding to be shifted to general operations. This would be to the detriment of the service, technology, and compliance initiatives envisioned to transform the IRS. Diverting IRA funding to cover base discretionary enforcement needs would lead to more noncompliance, leading to decreased revenue collection and increased deficits. In rebuilding and sustaining our capacity and capabilities with discretionary and mandatory funding, we plan to focus on hiring and growing talent with the right skills to address the nation's increasingly complex tax system. By leveraging technology, automation, and other tools, we will enable higher staff efficiency than was historically achieved. As we publish this Plan and work with stakeholders to obtain their feedback, we are also preparing to transmit supplemental budget materials in the weeks to come to the relevant Congressional committees outlining our preliminary spending plans by appropriation. These preliminary plans are in addition to the estimated spending outlined in the plan through FY 2024. We understand the expectation and responsibility for transparency in spending and will provide more details as they are available. We intend to work with these Committees as we have more details on our spending plans and will include updated estimated spending in future updates of the Plan and budget submissions. Specifically, we intend to share staffing information as we move forward and more detailed technology spending in advance of major technology investments. I look forward to continued engagement with our employees and external stakeholders as we implement this Plan. I also look forward to continued work with you and your staff on this great opportunity to deliver the modernized tax administration system that the American people deserve. IRS IRA Strategic Operating Plan 3 This page intentionally left blank 2 3 4 bj bj bj O O O Pa Ob rt j 5 Pa III rt Pa IV rt V 1 bj O Pa rt Pa I rt II Contents Internal Revenue Service Inflation Reduction Act Strategic Operating Plan Part I: Executive summary 7 Overview of the plan 8 What we will deliver 10 Part II: Objectives and initiatives 14 Objective 1: Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible 16 Objective 1 Initiatives 1.1-1.12 20 Objective 2: Quickly resolve taxpayer issues when they arise 46 Objective 2 Initiatives 2.1-2.7 48 Objective 3: Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap Objective 3 Initiatives 3.1-3.7 66 Objective 4: Deliver cutting-edge technology, data, and analytics to operate more effectively Objective 4 Initiatives 4.1-4.8 80 86 Objective 5: Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers Objective 5 Initiatives 5.1-5.8 62 102 106 Part III: Managing the transformation 124 Implementation and accountability 124 High level roadmap 126 Estimated allocation of funds 128 Stakeholders impacted by the Strategic Operating Plan 132 Part IV: Case study 134 Energy security and clean energy provisions of the IRA 134 Part V: Context and background 136 Alignment with the U.S. Treasury Strategic Plan 136 Context and trends that shaped the development of this plan 138 IRS IRA Strategic Operating Plan 5 This page intentionally left blank 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Part I: Executive summary The Inflation Reduction Act creates a major opportunity In August 2022, Congress enacted the Inflation Reduction Act (IRA), giving the Internal Revenue Service (IRS) a historic opportunity to transform the administration of the tax system and the services provided to taxpayers. The IRA provides us with approximately $80 billion over the next decade to significantly improve the way we serve the public. We will transform service to taxpayers by using this long-term funding to update technology capabilities and invest in our employees with new tools, skills, and capabilities. These resources will also ensure the fairness of the tax system by addressing the tax gap—the difference between taxes due and taxes paid—most recently estimated at $496 billion. The IRS has been significantly underfunded for the past decade, with a budget reduction of 22% in real terms from 2010 to 2021, leaving us with outdated technology and a shrinking workforce in the face of an increasingly complex tax environment in which to administer the U.S. tax code. This lack of investment has led to low levels of service, paper-based processes, antiquated technology, and an overall experience for taxpayers that falls short of what we want to deliver. The IRA investment is already transforming our ability to improve service to taxpayers. Shortly after enactment, the Department of the Treasury and the IRS initiated an effort to develop a Strategic Operating Plan, identifying the highest-priority opportunities to deliver transformational change for taxpayers. The planning process leveraged prior IRS planning efforts, including the Taxpayer First Act Report to Congress, new thinking around best practices and available technology capabilities, and current and past input from a wide range of stakeholders in tax administration. Additional context that shaped the development of this Plan is available in Part III and Part V. IRS IRA Strategic Operating Plan Part I: Executive Summary 7 Overview of the Plan This Strategic Operating Plan (also referred to as the “Plan”) outlines how we will deploy the investments in the IRA to better serve taxpayers, tax professionals, and the broader tax ecosystem. We will improve the taxpayer experience through better customer service, clearer guidance on how to correctly file taxes, increased options for filing electronically, and robust online accounts to take care of business quickly and independently. We will utilize tailored solutions to meet the diverse needs and preferences of all taxpayer groups. Congress has given us responsibility to administer, as effectively and efficiently as possible, more than 150 credits, deductions and other tax preferences in the tax law (generally referred to as “incentives” throughout this Plan). We know that many factors drive unintentional noncompliance and prevent taxpayers from claiming the incentives for which they are eligible. We will significantly improve the services we provide and tailor our compliance work in new ways. Taxpayers will have the tools, information and assistance needed to get their tax filings right – both in paying what they owe and claiming the incentives for which they are eligible. Our employees will likewise have the data, analytics, and tools to ensure compliance and fairness in the tax system. Our work to improve service must also be coupled with efforts to improve compliance by those who choose not to meet their obligations. The IRA acknowledges that an adequately funded federal tax administration will generate significant revenue for the country. The federal government loses nearly half a trillion dollars each year due to taxpayer noncompliance. This investment will significantly improve the IRS’s ability to address the tax gap. We will devote resources to enforcing the tax laws against taxpayers who attempt to avoid paying their tax obligations. All compliance efforts will be consistent with the Secretary of the Treasury’s August 10, 2022, directive that IRA resources are not used to increase the share of small businesses or households earning $400,000 or less that are audited relative to historical levels. We will use 8 IRS IRA Strategic Operating Plan Part I: Executive Summary the additional resources provided under the IRA to address high-dollar compliance issues, such as those related to complex partnership structures, large corporations, and high-income individuals. The Congressional Budget Office estimates that the additional $80 billion provided to the IRS by the IRA will increase federal revenue by more than $180 billion in the decade ahead, considering only direct enforcement revenue based on additional staffing.1 We believe the actual increase will be greater, since all our efforts as outlined in this plan—including in the areas of service, issue resolution and effective enforcement—will increase overall tax compliance. We will also use data and technology to ensure our resources are focused on noncompliant taxpayers. Through both service and enforcement efforts, ensuring taxpayers get their taxes right will help address the tax gap over time. For a more detailed allocation of funds of the Plan, please see Part III. To enable improved taxpayer services and compliance, we must deliver technology capabilities at a faster pace and bigger scale than we have achieved before. We will invest in new technology, building on contemporary foundational platforms, with modern architectures designed to meet our future needs. This will require careful coordination between delivering new capabilities and modernizing or retiring legacy platforms. It will also require shifting to an IT delivery model that better integrates business unit perspectives to deliver faster and better results to improve services to taxpayers. While ensuring the continued privacy and security of taxpayer data, we will enhance our use of data and analytics to drive operations and decision-making. Improved data analytics will better position us to optimize operations for taxpayers and employees alike. We will work to attract and retain the best talent as we transition to being a modern, digitally capable, customer-centric agency. We will develop and support a workforce that has modern tools to do its job effectively, broad knowledge of complex tax issues, analytical capabilities to work efficiently and effectively, and the organizational culture 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II to deliver together. As we deliver on the data and technology aspects of our transformation, the necessary skill sets and composition of our workforce will change. This Plan envisions a modernized IRS that is focused on the customer experience and prefers digital to manual processes and prioritizes compliance efforts that focus on complex tax issues. Looking at transformations of a similar scope, we know that the work needs of the future will look different from those of today (e.g., analytical and technical skills). This plan provides our employees and stakeholders with the information they need to understand where we are going and how we intend to get there. IRS IRA Strategic Operating Plan Part I: Executive Summary 9 What we will deliver IRA transformation vision We will make it easier for taxpayers to meet their tax responsibilities and receive tax incentives for which they are eligible. We will adopt a customer-centric approach that dedicates more resources to helping taxpayers get it right the first time, while addressing issues in the simplest ways appropriate. We will address noncompliance, using data and analytics to expand enforcement in certain segments. We will become an employer of choice across government and industry. These changes will enable us to serve all taxpayers more equitably and in the ways they want to be served. IRA transformation objectives 10 Objective 1 Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible Objective 2 Quickly resolve taxpayer issues when they arise Objective 3 Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap Objective 4 Deliver cutting-edge technology, data, and analytics to operate more effectively Objective 5 Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers IRS IRA Strategic Operating Plan Part I: Executive Summary Ø Data-driven decision-making will be the core of our approach to fundamentally shift how we manage operations and deliver services to taxpayers. Ø Taxpayers and tax professionals will be able to interact with us in the ways they prefer, including expanded digital, phone, and inperson assistance options. Ø Taxpayers will have easy, secure access to their data, as well as the tools to help them use it, to help them meet their tax obligations. Ø We will help taxpayers both meet their tax obligations and receive the credits and deductions for which they are eligible. Ø Electronic filing and communication options will be simpler and will make it easier to interact with the IRS. Ø We will offer notifications and proactive help for taxpayers and tax professionals to find and correct mistakes earlier. Ø We will resolve filing issues with clear notices and the fastest, simplest possible solution for the taxpayer. Ø We will use enhanced data and analytics to assist in the selection of compliance cases based on the highest risk of noncompliance. Ø We will increase capacity and expertise for enforcement to better address high-dollar noncompliance among complex filers. Ø We will retire outdated legacy IT systems and invest in new technology to improve customer experience, to provide data-driven enforcement, and to carry out skill-building on technology and data across the IRS workforce, so employees are able to use real-time data and analytics to drive their work and improve productivity. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II The IRS that emerges from this Plan will deliver a best-in-class experience for taxpayers. U.S. tax administration of the future will look different in many ways: Ø We will devote a larger share of employees to taxpayer-facing roles as demand for manually processed paper returns and correspondence decreases and systems are automated. Ø We will recruit, train, and retain a workforce with the skills and capabilities we need—people who put customer service first and are able to use our new technologies to work effectively. Ø We will improve the employee experience and empower the workforce to drive better taxpayer experiences, with clearer career pathways that will improve retention and support career growth and opportunity. Ø We will ensure the privacy and security of taxpayer data in all that we do. In addition to the transformation funding for the IRS, the IRA also includes technical tax provisions designed to incentivize energy security and clean energy investment in the United States. We are actively working to implement these provisions. While most of this Plan focuses on our overall transformation, we will also describe how these broader efforts will equip us to better deliver the energy security and clean energy provisions that Congress provided in the IRA. IRA Transformation Outcomes. As we move toward the future state described above, powered by the IRA investment and the initiatives outlined in this plan, we will measure the overall progress of the transformation according to the following transformation outcomes. In addition to these outcomes, we will monitor progress in several other indicators of success defined in Part II of this Plan. We will define detailed performance metrics for initiatives during implementation. • World-class service experience: Improved customer satisfaction metrics • Digital-first organization: Digital options for all taxpayer interactions with the IRS, alongside the continued option for taxpayers to interact in their preferred mode, such as phone or in person IRS IRA Strategic Operating Plan Part I: Executive Summary 11 • Improved take-up of tax incentives by eligible taxpayers: Increased eligible participation rate of credits and deductions, as well as decrease in inadvertent errors and improper payments • Effective enforcement: Reduce the gap between taxes owed and paid • Employer of choice within government and industry: Improved Federal Employee Viewpoint Survey results Accountability to stakeholders and previous IRS strategies The IRS will make this vision a reality and deliver on the commitments in this Plan by collaborating across the organization and engaging in disciplined and transparent accountability processes. This Plan outlines the framework that we will use to achieve the objectives in this Plan. While this Plan supersedes any previous IRS strategic planning documents, it is based in part on insights from those materials, including the 20222026 IRS Strategic Plan, and other planning efforts, including the Taxpayer Experience Roadmap; Business Unit strategic plans; Agencywide Equity, Diversity, Inclusion, and Accessibility (EDIA) Strategy and Roadmap; and the IRS Integrated Modernization Business Plan. The IRA gives the IRS the resources to turn our plans to improve the way we serve taxpayers into reality. The IRS serves and partners with a broad range of stakeholders. We also recognize that many populations have unique needs, and we will implement new services, resources, and other initiatives outlined in this Plan with accessibility for all. For details on impacted stakeholders, see Part III: Stakeholders impacted by the Strategic Operating Plan. 12 IRS IRA Strategic Operating Plan Part I: Executive Summary Immediate actions we have taken to improve outcomes for taxpayers and employees While we plan for the longer-term improvements we will make with IRA funding, we have already begun to deliver results. Over the past year, we have taken a range of actions to assist taxpayers, including: Ø Hiring over 5,000 new customer service representatives to process correspondence and answer phone inquiries, and beginning the process of hiring approximately 650 new employees to work in our Taxpayer Assistance Centers across the country Ø Reducing the inventory of original individual returns from 4.7 million waiting to be processed in January 2022 to pre-pandemic levels between 400,000 and 1 million in January 2023 Ø Consistently achieving a level of service between 80% and 90% weekly during the filing season, which includes phone calls answered by live customer service representatives Ø Preparing to scan and digitalize millions of business and individual tax returns in 2023, with Form 940 scanning underway as of February 2023 and Form 1040 scanning underway as of March 2023 Ø Providing customer callback option for 75% of calls to IRS live assistance toll-free telephone lines, with plans to expand coverage to 95% of taxpayers calling for toll-free live assistance by the end of July 2023 Ø Enabling direct-deposit refunds for 1040X (amended) returns in February 2023; previously, these refunds were solely issued as paper checks Ø Giving taxpayers the option to respond and upload documents electronically in response to a range of IRS notices 2 3 4 bj bj bj O O O Pa Ob rt j 5 Pa III rt Pa IV rt V 1 bj O Pa rt Pa I rt II Ø Launching Information Returns Intake System (IRIS) for businesses to electronically file 1099-series forms in January 2023 Ø Creating a tactical operations center to increase hiring and onboarding speed and capacity, in tandem with campaigns to improve employees’ access to critical supplies and equipment, pilots for increased flexibilities to compete with the private sector, and other efforts to improve the culture and value proposition of working at the IRS Above Immediate Actions figures and timeframes as of March 2023 IRS IRA Strategic Operating Plan Part I: Executive Summary 13 Objective 1 Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible Objective 2 Quickly resolve taxpayer issues when they arise Objective 3 Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap Objective 4 Deliver cutting-edge technology, data, and analytics to operate more effectively Objective 5 Attract, retain, and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers This Plan will serve as a guide for decision-making by IRS leadership and project managers. The Transformation and Strategy Office will coordinate detailed planning and execution efforts. See Part III for details on how implementation will be governed. The following describes the organization of this plan. Elements in Part II Example Transformation objective describes what we will do to make the vision a reality. Initiatives outline strategic bodies of work that will drive transformation. To be refined during detailed planning Pa r t I I : O b j e c t i v e s a n d i n i t i a t i v e s 14 The Plan has five main objectives, which will be achieved through the completion of a set of initiatives: Key Projects are discrete, actionable efforts for each initiative. The projects in the Plan are not comprehensive of all projects an initiative will include. Major Milestones will be tracked during implementation. The years provided in this Plan are best estimates. Timing will be updated as detailed planning proceeds IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Objective 1: Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible Initiative 1.2: Expand digital services and digitalization: Taxpayers will be able to file all documents securely and exchange correspondence electronically Create digital forms Expand digitalization Create viewable digitized data Milestone 1 (FY 20XX) Milestone 2 (FY 20XX) Milestone 3 (FY 20XX) Milestone 4 (FY 20XX) Milestone 5 (FY 20XX) 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Objective pages For each objective, the Plan includes the following information: Objective number and title Navigation bar Clean energy callout box Where we are heading Strategic shifts Exhibit Initiatives included in this objective Indicators of success Initiative pages Each objective is associated with a group of initiatives. For each initiative, the Plan includes the following information: Initiative number and title Navigation bar Where we are heading Key dependencies Key projects What success would look like Milestones IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 15 Objective 1 Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible Filing taxes can be time-consuming and difficult, and we have not been able to meet all demands for taxpayer services. Taxpayers want a more seamless filing process, similar to the services available in other sectors. We will significantly improve our services by providing taxpayers, including individuals, businesses, and tax professionals, with tools, information, and assistance to make it easier to comply. Initially this will require us to increase the number of employees providing customer services, but over time many of these improvements will be made possible by the technology investments outlined in Objective 4. Where we are heading • We will make interactions with us easier and more convenient for taxpayers and tax professionals, on par with the experience they expect from best-in-class public and private organizations and tailored to their needs. • We will improve our communications to taxpayers and invest in technology to provide them added digital options—in addition to in-person and paper options—for their interactions with us. • We will provide taxpayers and practitioners with the data and tools they need to interact with us via their preferred communication channels, proactively notify them of changes and events that impact their filings, and help them more easily, accurately, and securely file their taxes and receive the incentives for which they are eligible. What taxpayers could experience in the near future Ø A Taxpayer creates a secure Business Online Account at IRS.gov and lets us know which communications methods they prefer – email, paper mail or phone. The taxpayer selects email. Ø They later receive an email explaining tax credits and deductions for which they may be eligible. Ø Their online account gives them access to easy-to-read data to start this year’s tax return. Ø They have questions about how to file employment tax returns. A chatbot provides initial answers, and if they have specific questions, they can request a call from an agent. Ø An agent calls them back, reviews their account history with them, and answers their questions. The taxpayers then prepare their own return. Ø When they submit a return online, taxpayers get a real-time alert that shows easy-to-fix errors. They correct the errors and re-submit the return. Ø After they file, they use their online account to track refund status and adjust preferences. They opt to receive their refund via direct deposit. Visuals are illustrative 16 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Indicators of success ü Increased service levels ü Increased taxpayer service options and increased access to, and accessibility of, those options ü Decreased filing burdens for taxpayers ü Wider array of digital options to help taxpayers and tax professionals interact with the IRS and have a more seamless customer experience ü Decreased percentage of returns filed with math errors or errors related to third-party information reported to the IRS ü Decreased difference between credits and deductions available versus those claimed, as well as fewer inadvertent errors and improper payments ü Higher proportion of taxpayers satisfied with the filing process ü Increased taxpayer satisfaction with IRS interactions and service ü Higher proportion of paperless processes and systems throughout the IRS, from intake to processing How improving customer experience will further the energy security and clean energy provisions of the IRA • Through enhanced education and assistance, we will help taxpayers understand for which energy security and clean energy credits they may be eligible, and how to claim them. • Multichannel assistance will give taxpayers the ability to file and communicate with us through the channel of their choice. • Taxpayers will be able to log into their online account to track the status of their account and claims. • Consumers will be able to transfer their clean vehicle tax credit to a car dealer for an equivalent price discount starting in 2024. • Mapping tools will help taxpayers identify potential eligibility for certain energy security and clean energy tax credits. IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 17 Strategic shifts From To Taxpayers often must call the IRS to get help because self-service options are limited. Taxpayers and tax professionals will be able to interact with us in the way they prefer, including expanded digital, phone, in-person assistance options. Taxpayers lack convenient ways to access and use their tax data. Taxpayers will have easy, secure access to their data, as well as the tools to help them use it, to meet their tax obligations. Filing and communications are paper-based and inconvenient for taxpayers. Electronic filing and communication options will be simpler and will make it easier to interact with the IRS. Taxpayers get limited help navigating the tax system on their own. We will help taxpayers both meet their tax obligations and receive the incentives for which they are eligible. Initiatives included in this objective 1.1 1.2 Improve the availability and accessibility of customer service: Taxpayers will be able to receive on-demand customer service or schedule service ahead of time Expand digital services and digitalization: Taxpayers will be able to file all documents securely and exchange correspondence electronically 1.5 1.6 1.7 1.3 Ensure employees have the right tools: Employees will have the right tools and information to quickly and effectively meet the needs of taxpayers 1.8 1.4 18 Improve self-service options: Taxpayers will have access to secure online accounts where they can view their account and profile information, make changes, interact with the IRS, and manage preferences for payments, refunds, and communications IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Explore direct file: The IRS will explore providing taxpayers the option to file certain tax returns directly with the IRS online Enable taxpayers to access their data: Taxpayers will be able to access, download, and seamlessly share their tax data and IRS history Provide earlier legal certainty: Taxpayers will have greater upfront clarity and certainty additional guidance on tax issues Deliver proactive alerts: Taxpayers will be able to receive alerts to help them meet filing and payment obligations, understand opportunities to claim certain incentives and learn about life changes that could impact their taxes 1.10 1.11 1.12 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 1.9 Help taxpayers understand and claim appropriate credits and deductions: Taxpayers, including individuals and small businesses, will receive education and assistance in claiming available incentives Make payments easy: Taxpayers will be able to make payments more easily and seamlessly through all service channels Build status-tracking tools for taxpayers: Taxpayers will be able to use new status-tracking tools to see real-time status updates, next steps, and estimated time to process documents and resolve issues Streamline multichannel customer assistance: Taxpayers will be able to quickly, securely and accessibly get the help they need, resolve more issues in a single contact, and experience minimal delays during interactions with us IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 19 Initiative 1.1 Improve the availability and accessibility of customer service Taxpayers will be able to receive on-demand customer service and schedule service ahead of time , Where we are heading What success would look like When taxpayers have questions or concerns, they need the right answers quickly in ways that work for them. Low levels of service and limited customer service options are especially challenging for low-income taxpayers, those with limited mobility or limited English proficiency, and those who do not have flexible schedules. In short, many of those who need help most do not get it, contributing to tax compliance issues and loss of trust in the tax system. Success for this initiative would include a larger share of taxpayers being satisfied with IRS customer service options and perceiving that the IRS is “here to help.” More taxpayers would feel they are receiving accurate and timely answers to questions in ways that meet their diverse needs. Levels of service across all channels would increase, wait times would fall, and compliance with tax obligations would increase. The accuracy of returns would also rise, including claims for credits and deductions. We have dramatically increased the number of IRS employees providing customer service this filing season, but over the next few years we want to also dramatically improve technology-driven options for taxpayers. We will use enhanced data and analytics to forecast customer service demand and improve customer service access and options, staffing accordingly. We will enable taxpayers to schedule service through digital and in-person channels and develop a plan to provide estimated wait times and on-demand service through all channels, including at Taxpayer Assistance Centers (TACs). We will also ensure that communication channels for tax professionals, such as the Practitioner Line, are available and accessible. We will equip the employees who interact with taxpayers with training and the authority they need to resolve issues at the lowest appropriate level. As discussed in other initiatives, we will provide a multichannel service experience and improved employee tools to improve service delivery. Customer service improvements will be comparable across diverse taxpayer segments, including those with disabilities and limited English proficiency. 20 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Key projects 1. Expand service offerings across multiple service channels to meet the needs of taxpayers and tax professionals. Use improved data and analytics to project demand, staffing, estimated wait and processing times, and service locations. Adjust policies, services offered, and locations to provide in-person, telephone, and digital services for all taxpayers and tax professionals, including those in rural and underserved areas. This includes expanding the services available through current customer service channels such as the TACs and phones. 2. Provide the public with accurate wait time estimates. Include estimated wait times in customer service channels and processing times for high-volume returns and other forms. 3. Staff customer service functions to meet projected demand. Use enhanced data and analytics to project demand for customer services and better allocate well-equipped employees to meet demand. 4. Improve appointment scheduling and on-demand capabilities. Offer appointment scheduling and on-demand services across service channels. 6. Enable equal access through equitable practices. Provide equitable access to IRS services and opportunities for taxpayers. Meet the needs of rural populations, people with disabilities, those with limited English proficiency, other underserved communities, and small businesses. Explore creative opportunities for expanding the reach of live assistance. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 5. Develop policies and tools that support first-contact problem-resolution. Develop policies and tools that support the immediate involvement of the right people to resolve taxpayer issues quickly, even when first-contact employees do not have the information or authority to resolve the issues. Key dependencies 1.1 depends on projects in initiatives: 1.3, 1.4, 1.12, 4.5-4.7, 5.5-5.7 Initiatives dependent on projects in 1.1: 1.9, 2.6, 2.7, 5.8 Milestones 1 2 3 4 5 FY 2023 Expanded hours are available at the TACs for appointments and on-demand service with staffing to meet expected demand FY 2024 Taxpayers and tax professionals can schedule service appointments via multiple channels, based on staff availability FY 2024 Data and analytics capabilities are used to predict taxpayer demand and staffing needs for customer service and to project estimated processing time for certain returns and other forms FY 2024 Increased service availability and services are offered in TACs and on phones to meet taxpayer demand FY 2025 Data and analytics capabilities are used to develop real-time wait time projections for taxpayers seeking on-demand service IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 21 Initiative 1.2 Expand digital services and digitalization Taxpayers will be able to file all documents securely and exchange correspondence electronically , Where we are heading What success would look like Most taxpayers prefer to file IRS documents electronically when available, but the remaining paper-based filings have outsized effects on IRS operations. Paper filings take longer, cost more, and are more prone to errors, leading to a downward spiral in service quality. More issues create longer customer service wait times, which increase our support costs and the volume of issues we must work to resolve. We will enable secure electronic filing and processing for IRS documents, which will allow us to enhance our support for taxpayers who continue to file on paper, reducing the frequency of delays and errors in processing. Success for this initiative would include customers finding it easier to prepare and submit documents to the IRS. Processing times would fall for end-toend digital processes. Backlogs in paper and manual processes would be eliminated. The accuracy of translation of return data would increase as we phase in digital (e-filed) and digitalized (paper converted to digital data) receipts. Digital tools would be accessible for people with disabilities and available in taxpayers’ preferred languages. Expanding digitalization would also lessen the environmental impact of the IRS by reducing paper usage internally and by taxpayers, reducing the need for shipping and minimizing the amount of paper storage required. We will provide taxpayers the option to file documents electronically and securely. We will process all forms, returns, and certifications digitally regardless of how they are submitted, while maintaining paper submission options. We will ensure that taxpayers claiming credits are able to securely file digitally and are not unduly burdened during filing. We will scan and digitalize all incoming paper forms, returns, and communications to process them digitally. We will modernize forms and other documents to make them mobile-friendly, shifting away from the structure of traditional paper forms toward easy-to-use, interactive forms that can be easily updated and improved in response to changes in customer needs and tax laws. We will redesign service delivery, business processes, enterprise scanning, data intake, legacy systems, and case management systems to fully enable digital processing. We will become fully digital and modernize processes to improve the taxpayer experience and organizational efficiency; examples may include modernizing the Individual Tax Identification Number (ITIN) process, updating Tax Pro Account features to submit authorizations to assist clients, and fully digitalizing amended return processing. 22 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Key projects 1. Create digital forms. Modernize forms so they are easier to use, mobile-friendly, and take advantage of digital capabilities and interactive features that paper forms lack. 2. Expand digitalization. Digitalize papersubmitted forms, returns, applications, certifications, correspondence, or remittances at the point of receipt. This includes scanning and extracting data from forms, images, barcodes, and other sources. 3. Enable digital data delivery throughout the IRS. Clean and deliver data and images to the appropriate workflows for processing. 4. Reinforce secure storage and archiving practices. Implement necessary data storage requirements and best practices to retain proof of receipt and of senders’ identities. Archive materials as appropriate and required. 5. Create viewable digitized data. Make an image or representation of the submitted content viewable after submission for employees and taxpayer Online Accounts, as appropriate. 7. Evaluate which taxpayers are most burdened during filing and remove barriers to electronic filing. Evaluate which taxpayers face barriers during filing, such as those who may be eligible for credits and deductions; those who need information quickly from the IRS, such as residency certificates; or those who are required to paper-file in certain circumstances. Prioritize creating and improving digital pathways for these taxpayers. 7 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 6. Enable and implement digital processing. Replace and streamline case, account, and payment systems to incorporate more automation and digitally process data received from any submission. Create and implement a prioritization plan to digitalize end-to-end processing across the IRS based on need, impact, and feasibility. FY 2026-2027 Additional forms, returns, and certifications available for electronic filing and digitalization based on prioritization plan Key dependencies 1.2 depends on projects in initiatives: 4.1, 4.3-4.5, 5.5 Initiatives dependent on projects in 1.2: 1.4, 1.9, 1.11, 2.2, 2.7, 4.1, 4.5, 5.3, 5.8 Milestones 1 2 3 4 5 6 FY 2023 Certain documents, paper correspondence, and non-tax forms digitalized using the new Digital Enablement Platform launched in 2022 FY 2023 Enhanced scanning of key tax forms (e.g., Forms 940, 941, 1040) FY 2023 Planning and prioritization to enable and implement digital processing and electronic filing FY 2024 Highest-priority end-to-end digital processes implemented FY 2024-2025 High-priority forms, returns, and certifications available for electronic filing and digitalization FY 2025 Additional high-priority end-to-end digital processes implemented IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 23 Initiative 1.3 Ensure employees have the right tools Employees will have the right tools and information to quickly and effectively meet the needs , of taxpayers Where we are heading Our workforce of dedicated public servants needs the right tools and information to deliver the customer experience that taxpayers and tax professionals deserve. Taxpayers need real-time answers and secure access to account data that is easy to understand and interpret, while employees need the authority to make appropriate decisions and help taxpayers understand and resolve issues. We will create a simpler and more seamless experience for taxpayers by giving employees the tools to access and update taxpayer information and accounts. We will study employee needs holistically and create a centralized information system with appropriate tools to enable and empower them. We will train employees to use new systems and supporting tools. We will consider the needs of all employees, not just those in formal customer service positions. For example, in addition to studying the needs of customer service representatives, we will assess whether compliance employees have the appropriate information, analytical skills, communications tools, and authorities to resolve certain account issues when engaging with taxpayers on compliance issues. When an employee cannot resolve an issue, we will provide the taxpayer with quick access to IRS employees who can. We will put policies and systems in place to appropriately grant access and control employees’ abilities to make account changes. Taxpayer privacy and security will remain paramount in all we do. What success would look like Success for this initiative would include a rise in taxpayers’ satisfaction with the information they 24 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives receive during customer service interactions. Employee morale and job satisfaction would increase as they get more of the tools they need to do their jobs. The workforce would become nimbler, easier to train, and able to deliver service to taxpayers more quickly and effectively. Key projects 1. Build a holistic view of taxpayer accounts that employees can access. Create a secure centralized information system that provides customer relationship management via a history of all interactions across channels (e.g., chat bot, live assistor, online self-service experiences) and holistic views of taxpayer data, information, and history. 2. Build analytical, communication-based, and other tools for employees. Build tools so employees understand information more quickly, determine appropriate resolutions, and either resolve issues for taxpayers or immediately route them to the appropriate places for resolution. 3. Empower employees with the right information to answer questions and resolve issues during the first interaction. Provide employees with job aids and guidance to resolve a wide range of issues and answer questions during the first contact. 4. Give employees appropriate authorities to resolve issues immediately or route the taxpayer appropriately for fast resolution. Assess and expand the scope of resolutions employees can provide to taxpayers to empower employees to resolve issues effectively and efficiently at the lowest appropriate level. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Milestones 1 2 3 4 5 6 FY 2023 Partnership launched between IRS employees and the National Treasury Employee Union (NTEU) to study and build tools to help employees meet taxpayer needs more efficiently and effectively FY 2023 Comprehensive review and planning related to case management, customer relationship management, and data access, intake, and viewing capabilities to ensure employees have the tools they need to service taxpayers FY 2024 Delegations of authority studied and modified to empower employees to resolve issues at the lowest appropriate level FY 2024 Scope of services studied and modified to empower employees to resolve issues at the lowest appropriate level FY 2024-2025 Employee job aids and tools made accessible and searchable in a single place; training provided for employees on new tools, processes, and authorities FY 2024-2027 Additional capabilities launched based on prioritization plan Key dependencies 1.3 depends on projects in initiatives: 4.4-4.7, 5.5, 5.7, 5.8 Initiatives dependent on projects in 1.3: 1.1, 1.4-1.6, 1.8, 1.10-1.12, 2.1-2.4, 2.7, 3.1-3.6, 5.3, 5.8 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 25 Initiative 1.4 Improve self-service options Taxpayers will have access to secure online accounts where they can view their account and profile information, make changes, interact with the IRS, and manage preferences for payments, refunds, and communications Where we are heading Taxpayers and tax professionals should have easy, secure self-service options to get information and resolve issues. They should be able to interact with the IRS just as they would with most other customer-centric businesses and financial institutions. We will expand Individual Online Accounts to enable taxpayers to capture and store preferences and profile information, access user-friendly tax data, schedule payments, view status-tracking tools, opt into certain notifications, communicate securely with the IRS, initiate customer service requests, and more. We will build Business Online Accounts and enable business taxpayers to manage who can access company information and act on the entity’s behalf while offering a modern suite of self-service options. We will also offer options via online Tax Pro Accounts to manage authorizations, view client information, and take actions as authorized by clients. We will ensure employees can access and view online account information as appropriate to provide taxpayers and tax professionals a seamless customer service experience. Taxpayer privacy and security will remain paramount in all we do. What success would look like Success for this initiative would include an increase in the share of taxpayers using selfservice options. Customers would be satisfied with issue resolution times for self-service options. We would reduce need for live customer service as the primary issue resolution tool for customers 26 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives who use online accounts. Customer satisfaction with ease of use and availability of online account features would increase. Key projects 1. Provide comprehensive secure online account services for individual taxpayers. Add features to Individual Online Accounts, including the ability to schedule payments, save payment information, create and change payment plans, access user-friendly tax records, view the status of returns, refunds, and audits, opt into certain notifications, use secure messaging, and more. 2. Provide secure online account management for businesses. Include features to let business taxpayers manage their profile and designees, view balance and payment history, make payments, view account history, and more. 3. Expand Online Tax Pro Accounts. Enable tax professionals to manage their client authorizations online; view clients’ balances, payment histories, and notices; and act on their behalf to make payments, set up payment plans, and complete other account updates as authorized. 4. Create taxpayer profiles that integrate with other IRS systems. Incorporate taxpayer profiles into IRS accounts to holistically capture taxpayer preferences and payment information. 5. Give employees access to information to enable seamless customer service. Provide employees the ability to access information available to taxpayers, as appropriate, so they can assist taxpayers when needed. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 6. Enhance IRS.gov systems and content to support new digital tools, products, and services for taxpayers. Upgrade systems and improve content development to make sure IRS.gov supports the new capabilities and is accessible to taxpayers and stakeholders, including underserved and limited English proficient (LEP) populations. Milestones 1 2 3 4 FY 2023 Full implementation plan for online account enhancements developed for Individual, Business, and Tax Pro Online Accounts FY 2023 Enhancements to Individual Online Accounts and Tax Pro Online Accounts implemented FY 2023 Business Online Accounts for taxpayers launched FY 2024-2026 Enhancements to Individual and Business Online Accounts implemented to support capabilities that taxpayers and tax professionals need, based on the implementation plan Key dependencies 1.4 depends on projects in initiatives: 1.2, 1.3, 1.12, 4.1, 4.4-4.6, 5.5 Initiatives dependent on projects in 1.4: 1.1, 1.6, 1.8, 1.10-1.12, 2.3, 2.7 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 27 Initiative 1.5 Explore direct file The IRS will explore providing taxpayers the option to file certain tax returns directly with the , IRS online , Where we are heading We will explore making it easier for many taxpayers to file returns for free with a questionbased electronic service to prepare and file tax returns directly with the IRS. This service could lower barriers to claiming certain incentives. Many other tax authorities have rolled out the ability to file taxes directly for free as part of their digital transformations. The IRA requires the IRS to study the design of an IRS-run direct file service. As the IRS examines the cost and feasibility of building a direct file option, as required by the IRA, it will also study taxpayer preferences for products. The results of the study will inform if and how the IRS should design such a service. What success would look like Success for this initiative would include high satisfaction rates among customers who use the direct file service, if pursued, and continued use of a direct file service by taxpayers from one year to the next. Key projects 1. Study the feasibility of building a direct file service and the preferences of taxpayers. Ensure any direct file service is feasible, cost-effective, secure, and meets the needs of taxpayers. 2. If the outcome of the feasibility study warrants, create an additional option for how taxpayers can file their tax returns. Direct file would give eligible taxpayers a free, public electronic return-filing service option. 28 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Milestones 1 2 3 May 2023 Congressionally mandated study on direct file issued FY 2023 Feasibility and cost of releasing a direct file service determined based on direct file study results FY 2023 Next steps determined and communicated to Congress and other stakeholders Key dependencies 1.5 depends on projects in initiatives: 1.3, 4.4, 4.5, 4.7, 5.7 Initiatives dependent on projects in 1.5: None This page intentionally left blank 1 2 3 4 bj bj bj bj Pa Ob rt j 5 Pa III rt Pa IV rt V O O O O Pa rt Pa I rt II Initiative 1.6 Enable taxpayers to access their data Taxpayers will be able to access, download and seamlessly share their tax data and IRS history , Where we are heading Key projects We will enable taxpayers to securely access their own account data, including transcripts, account balances, payment and account histories, notices, service history, and more. More taxpayers will be able to understand the status of their accounts, identify and correct errors, and get their questions answered via self-service. 1. Make transcripts and account data easier to read and understand. Use plain language for IRS transcripts for all taxpayers and make them available in additional languages. We will also help taxpayers get their returns right the first time by providing taxpayers and their authorized tax professionals with data and information to help them populate their tax returns based on prior-year returns and current-year information. Providing taxpayers and authorized tax professionals with the option to begin tax returns using data the IRS already has will make the filing process easier. We will explore ways to help lowincome taxpayers access and use IRS data to remove barriers to getting the information necessary to file returns and claim benefits to which they are entitled. The information will be provided in a format that can interact directly with return preparation software or can be taken to a return preparer when authorized by the taxpayer, while still ensuring protection of taxpayer privacy. This service will reduce the chance that taxpayers will accidentally make a mistake or omission that requires filing an amended return or correcting an error after filing. What success would look like Success for this initiative would include improving customer satisfaction by helping taxpayers access and understand data. Customer service calls asking for transcripts and other documents that are accessible through the new online tools would decrease. Taxpayers who use this data to begin their returns would have fewer document-matching issues and make fewer amended returns. 30 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 2. Offer user-friendly and portable views of taxpayer account and return data and information. Provide taxpayers and tax professionals the ability to see or download account history to see payments, balances, notices, and other information, in line with similar interactions with financial institutions. 3. Help taxpayers start their tax returns with data that can go directly into return preparation software or to authorized return preparers based on taxpayer preference. Provide taxpayers and their authorized tax professionals the ability to retrieve data from prior-year returns and current-year information in a format that can interact with return preparation software if preferred. Taxpayers will have options to question the accuracy of information and correct any information return discrepancies prior to filing. Milestones 1 2 3 FY 2024 Current transcripts updated to be user-friendly and available in Spanish and other languages FY 2024 Business transcripts made available online and in an easy-to-read format through Business Online Account FY 2025 Mechanism developed to push data into return preparation software to help taxpayers prepare current-year tax returns 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 4 FY 2025 Online accounts upgraded to incorporate user-friendly views of account and return information (e.g., notices, letters, account history, payment history, balances due, etc.) Key dependencies 1.6 depends on projects in initiatives: 1.3, 1.4, 4.1, 4.4-4.6 Initiatives dependent on projects in 1.6: 2.6 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 31 Initiative 1.7 Provide earlier legal certainty Taxpayers will have greater upfront clarity and certainty through additional guidance , on tax issues , Where we are heading To provide taxpayers with the information they need to understand and comply with tax obligations, the IRS and the Department of the Treasury work together to issue guidance and advice to ease filing burdens on taxpayers and practitioners, as well as to provide certainty about the positions the IRS takes on tax issues. With limited resources, however, the IRS has been able to provide this guidance only for priority issues, leaving many taxpayers unaware of how the IRS views the application of the law and whether certain positions will be accepted. In coordination with the Office of Chief Counsel and the Department of the Treasury Office of Tax Policy, we will expand capacity to provide as much certainty on tax issues as possible. This will include issuing more legal guidance, interpreting the tax laws to address areas of uncertainty for all taxpayer segments, including current issues and those related to new legislation. We will emphasize early clarity—through formal or informal guidance—to address a wide array of taxpayer questions and reduce the need for subsequent enforcement actions. We will provide additional legal guidance to enable more taxpayers to meet their filing and tax obligations voluntarily, at the lowest cost. We will identify and implement new strategies to provide increased certainty for taxpayers. We will explore the best practices of other jurisdictions in providing taxpayers with early certainty in more timely ways, such as for risk stratification, safe harbors, or audit guidelines. What success would look like Success for this initiative would include a rise in voluntary compliance due to increased understanding. We would receive fewer requests from stakeholders and IRS employees for additional guidance and would be able to focus 32 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives more compliance resources on issues where there are true legal disputes. Key projects 1. Expand capacity for addressing taxpayer issues through guidance interpreting the tax law. Expand capacity in the Office of Chief Counsel and with the Department of the Treasury Office of Tax Policy to address more taxpayer questions proactively using both formal and informal legal guidance and rulings. 2. Explore new forms of informal guidance. Pursue the use of additional guidance tools to address current challenges and, where possible, provide greater certainty for taxpayers. We will continue to devise ways to provide guidance that are helpful to all taxpayers. Milestones 1 2 3 FY 2024 and ongoing More guidance provided quickly to address tax compliance and taxpayer services issues FY 2024 Priority areas for formal and informal guidance identified through consultation with external stakeholders and IRS data, in addition to expanding the annual Priority Guidance Plan process for published guidance FY 2024 Additional legal specialists hired within the Office of Chief Counsel and the Department of the Treasury Office of Tax Policy to support expansion of formal and informal guidance 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Key dependencies 1.7 depends on projects in initiatives: None Initiatives dependent on projects in 1.7: None IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 33 Initiative 1.8 Deliver proactive alerts Taxpayers will be able to receive alerts to help them meet filing and payment obligations, understand opportunities to claim certain tax incentives and learn about life changes that could impact their taxes Where we are heading We want taxpayers—including businesses and the self-employed—to have the information they need to understand and comply with tax obligations, claim credits and deductions, and understand the impact of life changes on their tax situation (such as marriage or the birth of a child). Educating taxpayers about their eligibility for different options and making it easier to access those options will build trust in the tax system and help taxpayers make more informed choices. We will use available data to create clear, informative, and personalized alerts that help taxpayers understand their obligations and the credits and deductions they may be eligible to claim. We will also give taxpayers the option to share life changes with us to learn about the potential tax impacts of those changes, and to opt into receiving notifications about potential life changes that we learn about from IRS data and partner data. We will build a data environment to better utilize taxpayer-related data sources, including customer accounts, customer service, third-party information reporting, and partner data. Taxpayers who choose to participate will receive simple, easy-toread notifications to help them understand how these life changes may impact their taxes. Taxpayers will be able to choose what types of information they receive, how often, and through what channels. We will use research-based education and outreach approaches to help taxpayers understand the benefits of enrolling in personalized alerts. What success would look like Success for this initiative would include an increase in the accuracy of participating taxpayers’ 34 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives tax reporting and claims for appropriate incentives. We would see decreased penalties and interest and have shorter examination cycles for taxpayers who receive relevant alerts. Key projects 1. Create options for taxpayers to receive informational and reminder alerts. Allow taxpayers to choose the types of alerts they wish to receive and their preferred communication channels, which could include in-app notifications, secure messaging, or email. Electronic alerts will incorporate security and authentication measures to protect taxpayer privacy. 2. Personalize what information taxpayers include to inform their alerts. Enable taxpayers to allow the IRS to use tax data to personalize alerts. 3. Build the capability for taxpayers to inform the IRS of major life changes and receive educational content. Enable taxpayers to update their life changes through their channels of choice, which we will use to inform them of potential impacts to tax obligations, credits, and deductions. 4. Build a coordinated partnering strategy to inform taxpayers. Partner with the Office of Management and Budget and other federal agencies working on life changes initiatives to develop and implement our part of an interagency strategy to provide comprehensive information to help customers make informed decisions and navigate the federal system during status changes. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Milestones 1 2 3 FY 2024 Systems, data sources, and federal and state partnerships established to support personalized alerts FY 2025 Intake process built so taxpayers can opt into alerts and inform the IRS of life changes FY 2025 Alerts implemented for individual and business taxpayers and tax professionals, including putting customer service mechanisms in place to answer calls and questions related to the alert process and the alerts themselves Key dependencies 1.8 depends on projects in initiatives: 1.3, 1.4, 4.1, 4.4-4.6 Initiatives dependent on projects in 1.8: 1.9 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 35 Initiative 1.9 Help taxpayers understand and claim appropriate credits and deductions Taxpayers, including individuals and small businesses, will receive education and assistance , in claiming available incentives , Where we are heading What success would look like Over the course of the last several decades Congress has given the IRS responsibility for delivering certain incentives through tax credits and deductions, including to small businesses and individuals. We recognize that in order to deliver on this mandate from Congress, we must incorporate the appropriate delivery of these incentives into every aspect of the IRS. Several IRS education and outreach programs facilitate taxpayer access, but many taxpayers remain unaware of tax credits and deductions for which they are eligible or face other barriers that deter them from claiming appropriate credits and deductions. For example, the IRS estimates that 21% of all eligible taxpayers did not claim the Earned Income Tax Credit in TY 2019.2 Success for this initiative would include an increase in the share of taxpayers successfully claiming incentives for which they are eligible. Taxpayers would also face fewer barriers to claiming credits and deductions they are eligible to receive as we redesign policies, processes and procedures to facilitate access. We would also see fewer inadvertent errors, as well as less fraud and abuse. We will remove barriers to claiming tax credits for eligible individuals and small businesses, including those who are not required to file tax returns, while maintaining robust measures to prevent inadvertent errors, fraud, and abuse. We will expand outreach, education, and partnerships to help taxpayers access appropriate tax credits and deductions and to coordinate credit and deduction delivery across the IRS. We will also review internal policies, processes and procedures to reduce barriers and burdens for taxpayers to claim appropriate credits and deductions. We will develop tools to measure uptake by eligible individuals and small businesses and estimate the share of eligible individuals and small businesses who do not claim their credits and deductions. Based on this analysis, we will improve efforts to help taxpayers receive the incentives for which they are eligible. 36 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Key projects 1. Coordinate incentive delivery across initiatives. Ensure that all the related initiatives under the Strategic Operating Plan include design choices and use data to help taxpayers understand and claim appropriate incentives. Facilitate collaboration across programs affecting credit and deduction delivery to improve the experience of those making claims. 2. Review and revise policies and processes to make the process for taxpayers to claim credits and deductions more efficient. Examine pathways and programs for understanding and claiming incentives to improve accessibility for eligible taxpayers. 3. Improve understanding of the credits and deductions gap. Use analytics to assess taxpayer uptake of credits, particularly those intended to benefit small businesses and underserved communities. Publish analyses on uptake of incentives, including overclaims and underclaims, and incorporate our findings into tax gap reporting. 4. Incorporate a “credits and deductions” search function in Online Accounts and improve relevant content on IRS.gov. Improve self-service pathways for taxpayers to learn about credits and deductions for which they might be eligible. 6. Enhance and cultivate community-based relationships and improve direct outreach to taxpayers, including small businesses. Expand relationships with taxpayer communities by developing a greater understanding of their needs and finding effective ways to provide information to different demographics in ways they will understand and trust, including distribution of educational materials using current and new social media platforms, podcasts, radio, television, community-based organizations, and other channels. Use a variety of platforms and messages to reach new demographics in cost-effective ways. 7. Expand partnerships with government agencies, private institutions, and others to provide education and service. As appropriate and legally permissible, partner with federal, state, and local government institutions, as well as Tribal governments, to share data and information to help taxpayers claim available credits and receive IRS service, particularly in under-resourced communities. Expand partnerships with public and private institutions, such as tax preparation service providers, software companies, VITA, lowincome tax clinics, faith-based organizations, nonprofits, and libraries, to distribute educational materials on available credits and deductions. 8. Support the IRS shift to a culture of service and continuous improvement. Develop policies and procedures to help IRS employees look holistically at each taxpayer’s individual situation and make sure the taxpayer is aware of the credits and deductions for which they are eligible. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 5. Expand the scale and scope of outreach and education forums. Expand the availability and services offered and raise awareness of existing forums, including refundable credit summits, IRS education and outreach, Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE), Low-Income Taxpayer Clinics (LITCs), and webinars. Milestones 1 2 3 4 5 6 7 8 FY 2023 Key tax credits and deductions identified as the focus of initial efforts; outreach and community partnership plans developed, including key details such as communication channels, partnership opportunities and messaging FY 2023 Policies and procedures identified and prioritized for revision to reduce taxpayer burdens FY 2024 Certain policies and procedures updated according to prioritization plan and feasibility FY 2024 First new set of scaled outreach and engagement programs launched FY 2024 Enhanced training including updated guidance on education and outreach for taxpayer-facing employees FY 2024 Methodology and estimate of selected credits and deductions gap developed FY 2024 Pilot completed for expanded partnership programs with government agencies and private partners; effective programs refined and scaled up FY 2025 New contacts launched for lawful non-filers who may be eligible for a credit or deduction to ensure they are aware of their eligibility and have the tools and assistance necessary to claim appropriate credits or deductions IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 37 9 10 FY 2025 Outreach efforts scaled to include broader list of tax credits and deductions for individuals and small businesses FY 2025 Additional updates to policies and procedures to reduce taxpayer burdens Key dependencies 1.9 depends on projects in initiatives: 1.1, 1.2, 1.8, 2.1, 2.6, 4.5-4.8, 5.1, 5.6-5.8 Initiatives dependent on projects in 1.9: None 38 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives This page intentionally left blank 1 2 3 4 bj bj bj bj Pa Ob rt j 5 Pa III rt Pa IV rt V O O O O Pa rt Pa I rt II Initiative 1.10 Make payments easy Taxpayers will be able to make payments more easily and seamlessly through all service channels , Where we are heading Taxpayers expect to have the same quick and easy payment options with the IRS that they have with other businesses, including online, by phone and in person. The IRS should apply payments to the appropriate tax accounts with full transparency about when and how the payments are applied. We will modernize payment systems and give taxpayers the payment options they expect to make it easier for them to pay the IRS seamlessly and easily. We will expand features in online accounts so that individuals, businesses, tax professionals and payroll processors will be able to make, manage, and view payments. We will also improve and expand options for online payments without registration, and enable payments over the phone, through IRS employees, and from international taxpayers. 4. Provide payment options to taxpayers abroad and foreign governments. Allow those with foreign bank accounts and foreign currency to make and receive payments. Milestones 1 2 3 What success would look like Success for this initiative would include a rise in the share of timely payments and declines in accruals of interest and penalties. Customer satisfaction regarding the ease and transparency of payment processes would increase. Key projects 1. Enable payments through online accounts. Allow taxpayers and third parties to make payments through online accounts, with options to pay by bank account, credit or debit card, or digital wallet. 2. Improve and expand guest payments. Allow individual and business taxpayers to pay without registration. 3. Give payors options to pay through IRS employees, over the phone—including on automated phone lines—and in person. 40 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 4 5 FY 2023 Online Account payment features expanded so taxpayers can schedule payments, cancel scheduled payments, and save bank information FY 2024 Business Online Account and Tax Pro Account payments plus Direct Pay enhancements implemented FY 2024 Payment capabilities over the phone and through employees launched FY 2025 Business Online Account and Tax Pro Account enhancements implemented (e.g., batch payments, save and manage bank information) FY 2026 Integrated payment capability by card and digital wallet developed Key dependencies 1.10 depends on projects in initiatives: 1.3, 1.4, 4.4-4.6 Initiatives dependent on projects in 1.10: 1.11, 2.7 This page intentionally left blank 1 2 3 4 bj bj bj bj Pa Ob rt j 5 Pa III rt Pa IV rt V O O O O Pa rt Pa I rt II Initiative 1.11 Build status-tracking tools for taxpayers Taxpayers will be able to use new status-tracking tools to see real-time status updates, next steps, and estimated time to process documents and resolve issues Where we are heading The IRS will provide taxpayers with access to personalized, real-time status updates on returns, refunds, and other IRS processes and decisions. These tools will help taxpayers identify the causes of delays or issues, get answers via self-service, and understand what to expect and what actions they need to take, if any. We will update existing online status tools and build capabilities into online accounts to enable this personalized status tracking. We will improve status categories and messaging to clarify next steps, integrate data and analytics to provide real-time personalized information and estimates, connect information across systems, and ensure employees have access to all the relevant information for consistency across service channels. What success would look like Success for this initiative would include more accurate projections for process and decision timeframes. Customer satisfaction with IRS statustracking tools would increase, including improved satisfaction with accuracy, ease of use, and value of information provided. We would receive fewer calls related to tracking the status of tax returns, refunds, audits, and other IRS processes. 2. Build access to status-tracking information within Online Account and Business Online Account for business and individual taxpayers. Allow taxpayers to find all their personalized status-tracking information in one spot. 3. Provide status information regardless of service channel chosen. Ensure that self-service online tools provide the same details via the phone and other channels by allowing IRS employees to see what the taxpayer sees online. 4. Allow tax professionals to view status information for their clients. Give taxpayers the ability to authorize tax professionals to track status for them through the online Tax Pro Account platform. 5. Give taxpayers the option to receive notifications when their refunds, returns, or payment status changes. Provide status notifications to help taxpayers trust that they have the most up-to-date information without constantly checking online tools. Milestones 1 Key projects 1. Provide real-time status updates on taxpayer refund and return processing, audits, and other service interactions. Create status-tracking tools that show more details about processes, incorporate data and analytics into messaging about estimated processing times, and provide clear instructions for next steps when appropriate. 42 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 2 3 FY 2023 Current refund and amended return status-tracking tools refined in Online Accounts to provide more transparent messaging for taxpayers that explains processing status, errors and issues, and next steps FY 2024 Improved taxpayer status-tracking tools in online accounts for filing season 2024 FY 2025 New status tracking enhancements implemented in Business Online Accounts 5 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 4 FY 2025 Real-time processing estimates launched with data analytics to provide more accurate status messaging FY 2024-2027 Audit status and other process-tracking launched and enhanced based on prioritization plan Key dependencies 1.11 depends on projects in initiatives: 1.2-1.4, 1.10, 4.1, 4.2, 4.4-4.7 Initiatives dependent on projects in 1.11: 2.6, 5.8 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 43 Initiative 1.12 Streamline multichannel customer assistance Taxpayers will be able to quickly, securely, and accessibly get the help they need, resolve , more issues in a single contact, and experience minimal delays during interactions with us , Where we are heading We will deliver taxpayers and tax professionals two-way communication options that are secure and easy to navigate. The IRS will manage interactions in ways that minimize customer burdens and make it easy to get information and resolve issues. We will offer taxpayers more options for communicating securely with us through multiple channels after proving their identity. We will add initial identity-proofing options, establish methods for linking identity information to all service channels, and ensure taxpayers can communicate back and forth with the IRS across all service channels. We will enable information about each customer’s history and current service interaction to follow the customer, allowing employees to understand what has happened so far and to seamlessly help the customer take the correct next steps, while appropriately protecting taxpayer data. What success would look like Success for this initiative would include higher rates of first-contact resolution for a larger share of issues. Taxpayers would resolve more issues through self-service and automated channels and require live customer service channels less often. Customer satisfaction rates would increase related to the ease of communicating with the IRS and of escalating customer service issues through different channels. 2. Allow taxpayers to use their initial identityproofing event for both digital and nondigital service options. Provide non-digital service options for taxpayers to link initial identity-proofing events to non-digital service interactions. 3. Provide taxpayers with different digital two-way communication service options. Give taxpayers secure online options to talk with IRS employees, view and send messages to the IRS, and upload documents. 4. Manage customer histories so that employees can view past and current interaction data in real time. In a related initiative, build tools that give employees access to customer service histories and minimize duplication, as customers should not have to repeat information. Milestones 1 2 Key projects 1. Offer a secure initial identity-proofing option for all taxpayers. Offer identity-proofing options that meet the unique needs of different taxpayers. 44 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 3 FY 2023 Digital options built and implemented to allow taxpayers to communicate back and forth with the IRS across different channels, including enhanced options to submit documents online FY 2023 Number of credentialing service providers for identity-proofing expanded, more services made available to authenticated taxpayers, and access expanded for certain types of taxpayers, such as ITIN holders and international taxpayers FY 2023 Technology tested to link identity information between certain service channels 5 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 4 FY 2023-2024 Certain employee views of customer histories delivered and enhanced, such as with customer relationship management tools FY 2024 Additional online options available for identity-proofing for individuals and businesses Key dependencies 1.12 depends on projects in initiatives: 1.3, 1.4, 4.4-4.6, 5.5 Initiatives dependent on projects in 1.12: 1.1, 1.4, 2.7, 5.6, 5.8 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 45 Objective 2 Quickly resolve taxpayer issues when they arise Millions of taxpayers make simple mistakes when completing their returns, and millions fail to properly claim tax incentives for which they are eligible. Resolving these and other simple mistakes can be a prolonged process. Through investments in our data management and taxpayer communication tools, we will work to resolve these issues more quickly and prevent their recurrence. The initiatives that support this objective will leverage a multichannel outreach approach. Where we are heading • When taxpayers make filing errors, we will reach out to them faster and offer clearer, more accessible ways to resolve issues. • We will help taxpayers who reach out to us get the help they need more quickly, addressing their concerns and fixing any problems they have. • Informed by data and enabled by improved technology, we will reach out to taxpayers when they may owe taxes and when they may have missed credits or deductions. How we will tailor solutions to taxpayers The most effective, least burdensome approach appropriate based on the taxpayers’ specific circumstances Installment agreement offered to a taxpayer unable Notice for eligible to pay their taxes at individual who missed Digital alerts for Inquiry for potential time of filing a credit simple mistakes misreporting Visuals are illustrative Indicators of success ü Increased notice response rate ü Decreased repeat noncompliance rate ü Increased share of credits and deductions claimed by those who are eligible ü Decreased average days between return filing and contacting taxpayers with issues 46 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives ü Faster resolution of compliance issues after filing ü For taxpayers with the ability to pay, increased percentage of new balance-due cases closed within one year of assessment 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II How faster resolution of issues will further the energy security and clean energy provisions of the IRA for consumers, small businesses, communities, and industries • We will flag issues with claimed credits at the time of filing so that taxpayers can correct them, if necessary, and promptly get the credits for which they are eligible. • Clear and transparent notices will promptly notify taxpayers claiming energy security and clean energy tax incentives when issues arise and will provide information for the simplest pathways to resolution. Strategic shifts From To Taxpayers do not have tools to easily identify potential mistakes and correct them before filing. We will offer notifications and proactive help for taxpayers to find and correct mistakes earlier. Taxpayers learn of issues via paper notices that can be difficult to understand and can be resolved only via inconvenient, paper-based processes. Electronic filing and communication options will be simpler and will make it easier to interact with the IRS. Simple filing mistakes and larger inaccuracies may require lengthy issue resolution processes. We will resolve filing issues with clear notices and the fastest, simplest possible solutions for taxpayers. Initiatives included in this objective 2.1 2.2 2.3 Identify issues during filing: The IRS will send taxpayers notifications about potential issues as they file returns to help them correct errors and claim credits and deductions Deliver early and appropriate treatments for issues: The IRS will provide taxpayers with timely and tailored post-filing treatments to resolve issues and omissions on their tax returns Develop taxpayer-centric notices: The IRS will send taxpayers notices they can understand, delivered in ways they prefer, with clear explanations of issues and steps to resolution 2.4 2.5 2.6 2.7 Expand tax certainty and issue resolution programs: Taxpayers will be able to resolve potential compliance issues up front through expanded pre-filing and tax certainty programs Offer proactive debt resolution: The IRS will proactively offer taxpayers appropriate options for past-due payment resolution Expand engagement with non-filers: The IRS will provide early, tailored outreach to taxpayers who do not file on time Use improved data and analytics to tailor timely collections contacts: The IRS will provide early, tailored contacts to all taxpayers with past-due balances, and will only escalate to more intensive treatments when appropriate IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 47 Initiative 2.1 Identify issues during filing The IRS will send taxpayers notifications about potential issues as they file returns to help them correct errors and claim credits and deductions for which they are eligible Where we are heading The IRS will notify taxpayers and tax professionals about potential issues and allow them to make corrections at the point of filing, reducing the need to resolve errors after filing. We will also offer realtime checks and notifications to help taxpayers claim any credits or deductions for which they may be eligible but have missed on their returns. We will advance our ability to systematically check each electronically filed return for errors in real time, match it against available third-party and internal data, and evaluate the taxpayer’s eligibility for credits and deductions. We will explain each potential issue in plain language in notifications that could be delivered to taxpayers or preparers directly or through their tax software. Each notification will include instructions on how to correct the issue and resubmit the return. If the return is not corrected, the IRS will follow its normal processes to reject or accept it. If the return is accepted, the taxpayer will still have opportunities to resolve errors later. What success would look like Success for this initiative would include rejecting fewer returns and sending fewer returns to error resolution for taxpayers who receive these notifications. For taxpayers who receive notifications about credits and deductions, claims for appropriate credits and deductions would increase. Key projects 1. Enhance systemic checks for return completeness and consistency. Identify issues at the point of filing such as math errors, missing forms, or missing income reported by third parties. 48 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 2. Send notifications for each issue identified. Include details of the issue and instructions on how to get further explanations, correct it, or dispute it. 3. Integrate notifications with filing software or systems. Make notifications available to taxpayers and preparers through their software and through any potential IRS direct file system. Milestones 1 2 FY 2024 Taxpayers and preparers notified of mismatches for simple types of income (W2s and 1099 NECs) and processing errors FY 2025 Taxpayers and preparers notified of potential filing issues including tax credits related to children and other dependents, other missed or erroneous credits and deductions, and other issues to be determined Key dependencies 2.1 depends on projects in initiatives: 1.3, 4.1, 4.4-4.7, 5.7 Initiatives dependent on projects in 2.1: 1.9, 2.5, 2.6 This page intentionally left blank 1 2 3 4 bj bj bj bj Pa Ob rt j 5 Pa III rt Pa IV rt V O O O O Pa rt Pa I rt II Initiative 2.2 Deliver early and appropriate treatments for issues The IRS will provide taxpayers with timely and tailored post-filing treatments to resolve issues , and omissions on their tax returns Where we are heading Key projects Most taxpayers want to be compliant. When issues are identified after filing, the IRS must help the taxpayer to become compliant as quickly and simply as possible. We will address issues identified after filing that require IRS intervention promptly and in ways tailored to the specific circumstances of the taxpayer, such as a soft notice to encourage self-correction instead of an audit, modes of delivery such as an electronic notice rather than an in-person visit, and pathways toward increased review. Notification could start with a soft notice, for example, and move to an audit if no action is taken or the issue remains unresolved. This approach will give taxpayers who want to comply with simpler ways to correct issues identified after filing and help to prevent unnecessary audits. For issues unresolved by this process, the IRS will move to audits. We will also streamline procedures so that issues can be resolved more quickly, with less burden on the taxpayer, when the taxpayer is being audited or affected by any other compliance contact. 1. Develop treatments tailored to taxpayers based on our assessment of the relevant issues. Based on a taxpayer’s unique circumstances and issue-specific level of risk, use advanced analytics to identify the most appropriate treatment to address potential noncompliance. Tailored treatments will help the taxpayer to establish and maintain compliance and minimize the burdens on that taxpayer. IRS treatments will be easy to understand and use multiple modes of communication, including texts and email. What success would look like Success for this initiative would include helping taxpayers resolve compliance issues more quickly, a higher incidence of correcting or self-correcting issues using less intrusive treatments when appropriate, a reduction in repeat noncompliance, and a higher incidence of taxpayers paying what they owe. Earlier contacts as appropriate will also improve the effectiveness of overall IRS compliance actions by focusing enforcement efforts on high-priority issues and cases with significant evidence of noncompliance. 50 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 2. Develop tailored treatments to help taxpayers claim missed incentives for which they are eligible. Take a comprehensive approach to detecting and helping taxpayers claim any incentives for which they are eligible. Establish tailored approaches addressing unique constraints and employ various methods of delivery. By applying advanced analytics, identify situational trends and appropriate treatments to alert taxpayers to credits and deductions they may qualify for but did not claim on their return. 3. Increase focused outreach in underserved communities. Engage with taxpayers, including small business taxpayers, in underserved rural and urban communities to deliver education and technical tools that directly address issues or opportunities identified on filed returns. Use communications specific to the demographic to help them understand. 4. Refine current treatments to make them more efficient and effective. Use enhanced data, analytics and digital tools to improve efficiency and resolve cases sooner. Identify opportunities to minimize taxpayer burden by improving enterprise-wide planning and coordination. Ensure communications are easy 5. Integrate data and analytics to increase the timeliness of treatments. Provide treatments as close to the time of filing as possible so that taxpayers can address issues sooner and avoid repeating them in subsequent years. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II to understand so that taxpayers can take corrective action. Explore ways to reduce the burdens on taxpayers affected by correspondence audits. Key dependencies 2.2 depends on projects in initiatives: 1.2, 1.3, 2.5, 3.1, 4.5-4.7, 5.5-5.7 Initiatives dependent on projects in 2.2: None 6. Improve the administration of penalties. Evaluate and improve the administration of taxpayer penalties and consider reasonable cause exceptions where applicable to encourage voluntary compliance and resolve issues faster when appropriate. Milestones 1 2 3 4 FY 2023 New research identified to foster our understanding of prevalent issues and the most effective treatments for those issues FY 2024 Refined methodology for assigning optimal treatments and appropriate follow-up treatments to taxpayers, developed through data-driven analysis and research; taxpayer indicators and behavioral characteristics identified that will help determine the most effective treatment for each taxpayer archetype FY 2024-FY 2026 Current treatments (e.g., correspondence and field audits, soft notices, education letters) refined to be more efficient and effective (first set of refinements deployed in FY 2024; improvements from digitization and analytics deployed in FY 2026) FY 2025-FY 2027 New tailored treatments developed and piloted based on data and analytics (FY 2025); additional treatment options piloted as new IT capabilities become available throughout FY 2027 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 51 Initiative 2.3 Develop taxpayer-centric notices The IRS will send taxpayers notices they can understand, delivered in ways they prefer, with clear explanations of issues and steps to resolution Where we are heading We must make it easier for taxpayers and tax professionals to understand the nature of potential tax issues and how to resolve those issues. We will redesign and update all notices for clarity, simplicity, and plain language, and allow for personalized notices in place of boilerplate language. At the same time, we will improve the process of redesigning and reviewing notices, adjust underlying systems and software to make updating notices easier, and ensure that the review process focuses on using simple, clear language. For those who prefer, we will make all notices available to taxpayers, tax professionals, and IRS employees online, even if they are also required by law to be mailed. We will enable taxpayers to respond to notices electronically and make all notices available in Spanish; translation into other languages will be added based on taxpayer needs. As the IRS expands available communication channels with taxpayers, they may be able to elect how they receive their notices. What success would look like Success for this initiative would include increased response rates and compliance rates among taxpayers who receive improved notices. Taxpayers would understand what information must be provided to claim credits and deductions. Their rate of using self-service options to resolve issues would likewise increase. Customer satisfaction measures would increase due to clearer notices and easier response processes. Key projects 1. Revise notices by simplifying the language. Update the notice review process and redesign all notices so that they clearly, briefly state the issues and required actions, and that they are 52 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives personalized and consistent with IRS messaging. Reduce notices’ length by providing embedded links to additional content. 2. Add digital copies of all notices to online accounts. Create digital copies of all notices so that taxpayers and authorized third parties can access them online. 3. Improve technology so notices can be updated without coding or system changes. Use new technology to accelerate updates and digitalize the content of notices, with the aim of increasing the current rate of five to seven notices per year to as many as 500 per year. 4. Expand digital response options. Build two-way communication channels so that taxpayers can respond to notices online. Include information about digital options in redesigned and digitalized notices. 5. Prioritize work on notices based on needs. Develop a long-term plan that reduces competing priorities, translates only redesigned notices, and includes all IRS notices and letters. 6. Translate notices written in plain language to the top eight languages used by taxpayers. Ensure that notices written in other languages are as simple and accessible as plain-English documents. Milestones 1 2 FY 2023 Prioritization plan developed for revising and implementing updated digitalized notices FY 2024 72 notices added to individual Online Account 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 3 FY 2024-2026 Capabilities launched for taxpayers and tax professionals to receive and respond to additional notices electronically Key dependencies 2.3 depends on projects in initiatives: 1.3, 1.4, 4.2, 4.4-4.6 Initiatives dependent on projects in 2.3: 2.5, 2.6 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 53 Initiative 2.4 Expand tax certainty and issue resolution programs Taxpayers will be able to resolve potential compliance issues up front through expanded pre-filing , and tax certainty programs , Where we are heading Pre-filing programs, in which the IRS and taxpayers work together to resolve complex issues before a tax return is filed, are not broadly available and are mainly focused on large business taxpayers. We will improve and expand tax certainty programs so that other segments of taxpayers can determine their tax obligations more quickly and with finality. These tailored pre-filing programs will provide more tax certainty to taxpayers who face complex issues. We will also work to adequately staff existing programs that have under-delivered to taxpayers due to resource constraints. In tandem with greater emphasis on early formal and informal legal guidance, this step will allow more taxpayers to reach tax certainty sooner. We will also prioritize providing clear answers earlier to a wide array of taxpayer questions, which will reduce the need for later compliance contacts. These steps will enable more taxpayers to voluntarily meet their filing and tax obligations right the first time, at the least cost. how to participate and articulating the programs’ benefits to eligible taxpayers. 2. Refine programs to address current challenges and, where possible, provide more tax certainty to program participants. Continue to refine current pre-filing and tax certainty programs to make them more streamlined and efficient for taxpayers. 3. Develop additional, tailored tax certainty programs. Create new programs to provide tax certainty to additional taxpayers who face complex tax issues or need to resolve outstanding errors. Develop these programs based on IRS and taxpayer experience, in close consultation with external stakeholders. 4. Consider removing user fees from programs where appropriate. Make these programs more accessible to taxpayers—particularly for small and mid-sized businesses—who could benefit from them. Further digitalize and improve our pre-filing programs to make it easier for these taxpayers to apply, upload documents, and correspond with us digitally. Milestones What success would look like Success for this initiative would include increased participation in tax certainty programs, faster resolution of taxpayers’ complex tax issues, and a reduction in post-filing compliance activities for participating taxpayers. Key projects 1. Expand capacity, eligibility and accessibility for current pre-filing programs where appropriate. Enable more taxpayers who face complex tax issues to use our tax certainty programs. Increase efforts to make taxpayers aware of these programs, including describing 54 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 1 2 3 FY 2023 Outreach and campaigns expanded to increase awareness of tax certainty programs and their benefits to taxpayers with complex issues FY 2024 Pilot program launched to invite taxpayers to participate in pre-filing programs FY 2024 Priority areas identified for new, tailored tax certainty programs through consultation with external stakeholders and IRS data, especially after assessing common issues that emerge following an increase in compliance coverage 5 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 4 FY 2026 Additional specialists hired and onboarded to support expansion of current tax certainty programs FY 2027 Additional specialists trained and current employees reskilled to support expansion of current tax certainty programs Key dependencies 2.4 depends on projects in initiatives: 1.3, 4.5, 5.1, 5.4, 5.6, 5.7 Initiatives dependent on projects in 2.4: None IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 55 Initiative 2.5 Offer proactive debt resolution The IRS will proactively offer taxpayers appropriate options for past-due payment resolution , Where we are heading Key projects More than 10 million taxpayers have past-due balances.3 Many want to pay what they owe, and many have filed their tax returns but are facing hardships that hinder them from paying their full tax balances on time. While it is taxpayers’ responsibility to pay their taxes or make alternative arrangements, those experiencing hardship may not be able to easily set up a payment arrangement, such as an installment agreement or offer in compromise. In some cases, fees apply to taxpayers who enter these arrangements. 1. Develop analytics to identify the repayment options best suited to each taxpayer’s circumstances. Leverage IRS data and analytics to develop solutions tailored to taxpayers’ circumstances. For example, we will proactively offer short-term payment plans or installment agreements to eligible taxpayers. We will simplify available options for taxpayers who are seeking to resolve their past-due balances or to make payment arrangements with the IRS. We will also reach out to taxpayers who have failed to make payments and offer them options. For some taxpayers, we will offer potential resolutions, such as short-term payment plans, installment agreements, or a temporary delay of collection, with terms appropriate for the taxpayer’s circumstances. In other situations, we will alert taxpayers to all balance resolution options available and the processes for enrolling. This outreach will be timely; we will contact taxpayers as soon as payments are missed so that they can address their past-due balance as quickly as possible to reduce the accumulation of interest. What success would look like Success for this initiative would include increased voluntary compliance with an increase in the number of taxpayers who willingly enter arrangements to address their past-due balances in ways that are suited to their circumstances. Other markers include reductions in the overall amount of tax debt, the number of taxpayers with past-due balances, and accumulated interest, since taxpayers will be able to address past-due balances more quickly. 56 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 2. Create processes for real-time identification of taxpayers who miss payments and contact them through the channel of their choice. Develop and refine processes to quickly identify accounts that miss payments so that taxpayers can be contacted immediately via the channel of their choice (e.g., phone, email, text, or letter). Expand our capacity to provide customer support to taxpayers who seek to understand their options and choose the most appropriate resolution. 3. Leverage IRS data and analytics to notify and help taxpayers avoid repeat delinquency. Leverage IRS data and analytics to identify potential repeat delinquency. Proactively contact taxpayers with information about the consequences of missing a payment and explain the options available to them. 4. Evaluate options for reducing or waiving fees. Consider various options for eliminating fees or expanding the use of fee waivers for certain taxpayers who enter arrangements with the IRS to resolve their past-due balances. 5. Refine resolution options to be more effective at reducing debt and easier for taxpayers to use. Incorporate offer in compromise eligibility checks and enrollment applications into online accounts. Develop and improve tools for online installment agreements. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Milestones 1 2 3 4 FY 2023 Improvements to online installment agreement portal launched FY 2024 Evaluation conducted of fees for payment arrangements FY 2025 Enhanced analytics launched for predicting where a proactive resolution may be appropriate FY 2026 Capability launched for taxpayer access to a broader range of self-service debt repayment tools through online accounts Key dependencies 2.5 depends on projects in initiatives: 2.1, 2.3, 2.7, 3.1, 4.6 Initiatives dependent on projects in 2.5: 2.2, 2.7 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 57 Initiative 2.6 Expand engagement with non-filers The IRS will provide early, tailored outreach to taxpayers who do not file on time , Where we are heading What success would look like Individuals and entities who are required to file tax returns but fail to do so on time are known as delinquent non-filers. Many are not intentionally avoiding taxes but fail to file for simple reasons, such as being unaware of their obligation to file taxes, forgetting to file, not knowing how to file, missing the deadline to request an extension, or attempting to file but failing to ensure that their return reaches the IRS. Today, IRS notices to non-filers are delayed and are not tailored to the common reasons taxpayers do not file. Delinquent non-filers may be subject to penalties when the IRS assesses their tax obligations, and they may even miss credits and deductions for which they are eligible. Success for this initiative would include an increase in non-filers who are detected and contacted in a timely manner so they can voluntarily comply; an increase in simple options that reflect the reasons why individuals and entities do not file, thus improving the taxpayer experience; an increase in the number of taxpayers who selfcorrect (i.e., pay on their own without intervention); and a reduction in the number of taxpayers who face additional penalties. We will expand outreach to individuals and entities as soon as they miss a filing deadline and provide more options to help them become compliant. These options will be simple, easy to understand, and reflect common reasons why individuals and entities do not file on time. We will explore options such as: (1) prompting taxpayers to file a simple request for an extension; (2) allowing certain individuals to indicate that they have only wage income and would like the IRS to complete their returns based on reported information; (3) informing individuals who are not required to file returns about tax credits they may be eligible for; and (4) proactively offering payment agreements to taxpayers who may not be able to pay in full immediately. Communications will provide clear information about the consequences of not filing and help taxpayers become compliant. We will also enhance our use of data and analytics to identify and contact more non-filers in a timely manner. 58 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Key projects 1. Develop tailored non-filer treatments that are simpler for taxpayers and address common issues that cause taxpayers not to file. Explore more options to help taxpayers become compliant that are simple, easy to understand, and reflect common reasons why individuals and entities fail to file. 2. Build enhanced analytics to detect more non-filers sooner. Use improved data and expand the use of analytics to detect more non-filers as soon as they miss deadlines. 3. Build treatments tailored for non-filers who are not required to file returns but may be eligible for tax credits. Develop analytics to better identify lawful non-filers who may be eligible for a credit or deduction. Explore simple tools and contacts to help them access tax credits for which they are eligible. 4. Expand capacity and resources for our non-filer and return-delinquency programs. Increase capacity and resources for non-filer programs so that we can proactively contact all appropriate non-filing individuals and entities identified, thereby providing exceptional customer service to non-filers who need assistance in becoming compliant. 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II Milestones 1 2 3 4 FY 2023 Pilot program for new non-filer treatments launched FY 2024 Successful pilot treatments scaled FY 2024 Analytics for detecting non-filers shifted for use immediately after filing deadline FY 2025 All appropriate non-filers receive tailored, proactive outreach before receiving automated assessments or penalties Key dependencies 2.6 depends on projects in initiatives: 1.1, 1.6, 1.11, 2.1, 2.3, 4.5, 4.6 Initiatives dependent on projects in 2.6: 1.9 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 59 Initiative 2.7 Use improved data and analytics to tailor timely collections contacts The IRS will provide early, tailored contacts to all taxpayers with past-due balances, and will only escalate to more intensive treatments when appropriate Where we are heading When taxpayers do not file or fully pay their taxes on time, resolving their tax obligations becomes increasingly difficult as time progresses. Early contact gives the IRS an opportunity to assist these taxpayers in resolving their underlying problems so that they can avoid additional liabilities. We will use more data and better analytics to reach out to taxpayers earlier, with more options to address their unpaid balances quickly and simply. We will shift to a collection approach that treats all accounts individually, with a customized approach that reflects the cause of the current tax debt, considers appropriate collection alternatives and enables the taxpayer to comply. We will accelerate attempted resolution by basing the first compliance contact on the most likely ultimate resolution of that case. What success would look like Success for this initiative would include a higher percentage of new balance-due cases closed within one year of assessment, and a higher number of communication methods used to contact taxpayers based on their preferred channels, including text, telephone and email. Taxpayers would also resolve past-due tax balances more quickly. Key projects 1. Hire, onboard and train the workforce needed to assist taxpayers and address balance-due accounts more quickly. Replenish the collection workforce by hiring specialists and developing the current workforce’s skills to reach the desired collection coverage, to address high-priority segments, and to assist taxpayers in compliance options. 60 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives Increase staff in the Independent Office of Appeals to facilitate the resolution of collection matters, as well as in the Office of Chief Counsel to support collection and appeals and to litigate cases when necessary. 2. Develop improved analytics models to better inform taxpayer contacts. Predict which accounts are unlikely to self-correct so that we may prioritize contacts to these accounts using real-time data. Build models to predict the ultimate resolution of each balance-due case to ensure that the case is treated appropriately. 3. Refine collection communications to make them more efficient and effective. Redesign current notices and other communications to make them clearer and to help the taxpayer understand directions and a seamless way to resolve the issue. 4. Develop and pilot new collection treatments based on data and analytics. Develop new collection treatments by leveraging new data and IT capabilities, such as digital communications channels. Milestones 1 2 3 FY 2024 Analytics models used earlier in the collection process, so taxpayers receive tailored communications immediately after the first notice that balance is due FY 2025 Analytics models refined to better predict which taxpayers will self-correct and the likely resolution of each balance-due case to better inform taxpayer contacts FY 2025 New collection treatments piloted and developed based on data and analytics 5 4 bj Pa Ob rt j 5 Pa III rt Pa IV rt V 3 bj O 2 bj O 1 bj O O Pa rt Pa I rt II 4 FY 2026 Workforce needed to achieve collection coverage levels hired, onboarded and trained FY 2024-FY 2026 Notices refined to make them more efficient and effective (first set of refinements deployed in FY 2024; improvements from digitalization and analytics deployed in FY 2026) Key dependencies 2.7 depends on projects in initiatives: 1.1-1.4, 1.10, 1.12, 2.5, 3.1, 4.5-4.7, 5.1, 5.5 Initiatives dependent on projects in 2.7: 2.5 IRS IRA Strategic Operating Plan Part II: Objectives and Initiatives 61 Objective 3 Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap Even with improved taxpayer service, some taxpayers will not comply. The rising breadth and complexity of tax administration, coupled with the sophisticated ways that some taxpayers attempt to evade tax, have outpaced our resources and ability to monitor compliance and close the gap between taxes owed and collected. We will improve our efforts to help ensure that the proper amount of tax is paid and to promote future compliance. Pursuant to Treasury’s directive, small businesses and households earning $400,000 or less will not see audit rates increase relative to historical levels. We will increase our focus on segments of taxpayers with complex issues and complex returns where audit rates are minimal today, such as those related to large partnersh [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A977c2106ab19591f. Public record. Not legal advice.