3 ways the IRS is making it easier for small business owners to do their taxes

By Melissa Angel, Inc. (TNS)

After months of anticipation, small businesses now know what a Improved Internal Revenue Service It may seem that the agency is beginning to transition to A. Digital-first approach.

IRS On April 6, he unveiled his $80 billion plan to kick-start the agency’s modernization efforts, which will introduce new digital tools, streamline tax processes and provide more assistance to taxpayers. Some of the reforms will be introduced gradually over the next 10 years, although the IRS has indicated that it will focus on eliminating the paperwork in the first five years. This is a key issue for the agency. It started 2022 with an unprocessed paper filing of 11.5 million returns, one-third of which were first business returns.

The allocated funds from Inflation Reduction Act And it helps the IRS work more efficiently with taxpayers. As part of that focus on efficiency, the agency has decided to resolve taxpayer cases more quickly — which is very interesting, said former IRS Commissioner Mark Everson.

“This goal is good news for all taxpayers, but especially for small businesses, who want to be treated fairly by the IRS but don’t want unresolved tax issues hanging over them like the sword of Damocles,” said Everson, vice chairman of Houston-based tax consulting firm Alliantgroup. “The service will take time to roll out the proposed improvements, but we have seen better phone performance during the current delivery period.”

With the plan in place, interacting with the agency should be much easier over the next decade. But there are three specific reforms that will make a big difference for small-business owners — and some of them will be released as early as this year.

1. The digital way

Thanks to the agency’s digitization efforts, entrepreneurs can file all their tax documents and respond to notifications online. For example, a new tool allows business owners to respond to up to nine ads online. Typically, if an entrepreneur receives a Notice of Document Verification, they must respond by mail. Businesses can now file Form 1099s online. These steps will help the IRS chip away from paper records as the agency goes digital.

That’s not all. The agency is making efforts to simplify tax forms such as Forms 940, 941 and 944 and will also work to make these forms mobile-friendly.

2. Tax credit assistance

Claiming tax credits for small business owners is about to get easier. The IRS plans to introduce a “Credits and Deductions” search tab on its website to help entrepreneurs claim theirs. The agency will introduce personalized alerts to notify taxpayers and partner with nonprofits and other local entities to expand outreach efforts. This is the first time the agency has offered this type of assistance to business owners.

The IRS is introducing new online service tools this year to simplify the tax process for self-employed people. In the year By 2023, the agency is launching online business accounts that will expand as the IRS improves its capabilities. In the year By 2024, entrepreneurs can track their refunds and schedule payments. Access to information and other records such as business tax transcripts will also be optional. An added bonus: Business owners can correct processing errors during filing, which can help speed up refunds.

While all these changes will take time to implement, the good news is that some efforts, such as digital scanning, are underway. In the year On March 8, the IRS shared that it has scanned more than 120,000 paper Form 940s since the beginning of the year, a 20-fold increase compared to the entirety of 2022, according to the agency. And then he only hopes to improve – which business owners will certainly welcome.

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