Filing taxes is often treated as a yearly financial health check, and a new set of proposals could make the process simpler.
The Electronic Tax Administration Advisory Committee (ETAAC) has issued its annual report with 18 recommendations for Congress and the IRS. The proposals focus on modernizing the tax system with tools such as artificial intelligence and digital services, while also changing how Americans file and pay taxes.
Although none of the ideas have become law, they could have wide-reaching effects if adopted. Below are some of the changes most likely to matter to taxpayers and how they might prepare.
Electronic delivery of W-2 forms
One proposal would let employers send W-2 forms electronically by default instead of relying on paper copies. Paper forms can be mailed to old addresses, which raises the risk of identity theft and refund fraud. Email addresses, by contrast, usually remain the same even when people move.
ETAAC said workers should still be able to opt out and request paper delivery, but the default would be digital. The report also stressed that any move toward electronic W-2s should include strong identity verification. For employees, that could mean faster access, fewer mailing problems, and better protection against fraud.
Better IRS online accounts
The report also urged improvements to IRS online accounts, which could reduce the need for phone calls and letters. It said some accounts still lack useful features and consistent reliability, and called on the agency to strengthen its digital systems.
Among the suggestions were user guides and a technical support line to help filers navigate the online tools, get assistance, and resolve problems. The report also encouraged user research to identify bottlenecks and simplify communications about online accounts so the tools can work more effectively. Those changes could make it easier to find information without contacting the IRS directly.
Clearer and quicker e-file error codes
ETAAC also recommended updating e-file error codes so taxpayers can better understand why a return was rejected. At present, rejection messages can be vague and may not explain how to correct the issue and resubmit. That often leaves filers needing to call the IRS for more details.
More detailed codes could help taxpayers identify and fix errors on their own, saving time and avoiding unnecessary frustration.
Using AI to fight fraud and identity theft
The report said current fraud detection systems can produce too many false positives and create lengthy backlogs. It also noted that low-income taxpayers are disproportionately affected by identity theft, making them more likely to be flagged by the system and delayed when they may be counting on refunds for essential expenses.
To improve that process, the committee suggested using AI to build stronger fraud detection and identity theft protections. One example was reinforcement learning, which could reduce false positives in IRS fraud filters and ease the burden on both taxpayers and agency staff.
Tighter oversight of paid tax preparers
Another recommendation called for stronger regulation of tax return preparers who are not credentialed. Many have no formal training or experience, and the report warned that the lack of minimum standards can expose taxpayers to mistakes or abuse.
ETAAC said the IRS should set baseline requirements for paid preparers, such as background checks, tax compliance checks, and required education. Those measures could help protect taxpayers who depend on professionals to prepare accurate returns.
The Crapo-Wyden Taxpayer Assistance and Service Act could also expand the IRS’s authority over paid tax preparers. The bipartisan bill would create new rules, including competency standards and continuing education, to help guard against errors and fraudulent filings. The Senate approved the measure unanimously, but it still needs House approval and presidential action before it can become law.
Calls for steady funding
The report also strongly backed stable IRS funding. It said recent workforce reductions and budget uncertainty have strained the agency’s ability to carry out growing responsibilities, including major new legislative requirements.
Congress was urged to provide dependable funding for technology upgrades and taxpayer services. Without that support, the report warned, the IRS may struggle to complete important system improvements, keep technical staff, or meet rising service expectations. More consistent multi-year funding could also help cut delays and backlogs during tax season.
Bottom line
The ETAAC report is advisory, so the IRS can choose whether to act on its operational recommendations, while Congress would handle any legislative changes. Even if adopted, the proposals would likely take time to roll out, but the report makes clear that the tax system needs modernization and a smoother experience for filers.
If implemented, faster filing tools and stronger fraud protections could eventually reduce headaches and help taxpayers get their refunds with less hassle.
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