Modernizing the Agency for a Digital-First Approach
Small business owners have long had a complicated relationship with the Internal Revenue Service (IRS). Filing taxes can be a daunting and confusing task for entrepreneurs, and the agency’s reputation for being bureaucratic and slow to respond has only added to the frustration. However, recent developments show that the IRS is making a concerted effort to improve its relationship with small business owners. The agency has announced an $80 billion spending plan to modernize its operations, making it easier for small business owners to do their taxes. We’ll look at three ways the IRS is making it easier for small business owners to do their taxes.
The path to digital
The IRS’s digitization effort is perhaps the most significant improvement for small business owners. Online filing of all tax forms and notice responses will be available to business owners. For instance, business owners will be able to respond to up to nine notices online, which means they no longer have to worry about responding via mail. The agency is also introducing new tools that will allow business owners to file their Form 1099s online. This will help the IRS chip away at its paper backlog, which has been a major problem for the agency.
In addition to making it easier to file taxes, the IRS is also simplifying tax forms like Forms 940, 941, and 944. These forms will also be made mobile-friendly, which means that business owners can fill them out on their smartphones or tablets.
Tax credit assistance
Small business owners are often eligible for tax credits, but claiming them can be a confusing and time-consuming process. The IRS plans to introduce a “credits and deductions” search tab on its website to help entrepreneurs claim what’s theirs. Additionally, the agency will introduce personalized alerts to notify taxpayers of credits and deductions they may be eligible for. The IRS is also partnering with non-profits and local entities to expand outreach efforts, which means that business owners will have access to more information about the tax credits and deductions they’re eligible for.
This is the first time the agency is offering this type of assistance to business owners. By providing guidance and assistance in claiming tax credits, the IRS is making it easier for small business owners to save money and reinvest those savings back into their businesses.
More online service tools
The IRS will introduce new online service tools to make the tax process easier for entrepreneurs. Beginning in 2023, the IRS will offer online business accounts, which will be enhanced as the IRS develops its capabilities.
By 2024, entrepreneurs will be able to track their refunds and schedule payments online. They will also be able to access data and other records, such as business tax transcripts. Business owners can speed up refunds by correcting processing errors when filing their taxes through the new system.
All of these changes will take time to implement, but the IRS has already begun digitizing its operations. The government agency reported in March that since the year’s beginning, it had scanned more than 120,000 paper Form 940s, a 20-fold increase from 2022. The agency hopes to improve on these numbers going forward, which is great news for small business owners.
Small business owners are finding it easier to file their taxes thanks to a concerted effort by the IRS. The agency’s $80 billion spending plan will introduce new digital tools, streamline tax processes, and offer more assistance to taxpayers. Improvements will be phased in over a decade, with emphasis on eliminating paper backlog in the first five years. The changes will simplify tax filing, tax credit claiming, and online data and record access for small business owners. While there will still be some challenges, these changes represent a significant step forward for the agency
Our short blog only scratches the surface of the many nuances and opportunities that exist within the tax code. We strongly encourage you to seek the assistance of a qualified tax specialist who can help you identify potential risks and opportunities that are specific to your business. The IfindTaxPro marketplace provides an easy and convenient way to find such help. If you are a business owner in need of assistance, we encourage you to find help, rather than trying to figure it all out alone. Consider trying the IfindTaxPro marketplace by posting your project and signing up here.
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