The IRS is setting a higher standard of customer service for taxpayers by tapping into billions of dollars in a multi-year modernization fund.

The IRS, under the Inflation Reduction Act, received about $60 billion to rebuild its workforce and modernize its legacy IT systems over the next decade.

Fumi Tamaki, the IRS’ chief taxpayer experience officer, said the agency is focused on delivering “impactful service” to the public.

“The funding that we received, it is enabling us to accelerate a lot of the things that the Internal Revenue Service wanted to do for a very long time,” Tamaki said.  “It’s a very exciting time to be at the IRS, because the focus on service is just tremendous right now.”

The IRS is designated as a High-Impact Service Provider, because of its relationship to taxpayers.  It received more than 132 million individual tax returns in fiscal 2024.

As the federal government’s primary source of revenue, it also provides equally valuable service to other federal agencies.

“We are also a High-Impact Service Provider to other High Impact Service Providers as well, because the tax dollars that we collect will fund other mission-critical things that the other High Impact Service Providers and other government entities do,” Tamaki said.

IRS meeting customer expectations with Direct File

In addition to increased staffing and making long-deferred IT upgrades, the IRS is also tapping into Inflation Reduction Act funds to make it easier for taxpayers to pay what they owe.

For example, an IRS-run system that lets households file their federal tax returns online — and for free — is here to stay, after the agency let taxpayers test the platform out earlier this year.

The IRS piloted its Direct File platform this year with 12 states.

After gathering feedback from some of the 140,000 taxpayers who used Direct File, the agency made the program permanent and expanded its reach to more states.

Direct File Chief Bridget Roberts said 24 states have opted into Direct File for the 2025 filing season. More than 30 million taxpayers in those states will be eligible to use the platform next year.

“We talk about Direct File as something that we built with taxpayers, not for taxpayers,” Roberts said. “From the very beginning, from that prototype, we were putting parts of Direct File in front of taxpayers before it even launched, to get their feedback and to make changes to the products that we finally did launch, it was as user-friendly as it could be.”

About 90% of taxpayers who used Direct File during the pilot gave the platform a positive review.

“It was really exciting to be able to bring this to taxpayers, and to be able to show that the IRS can do really innovative things like Direct File,” Roberts said.

Roberts said 87% of Direct File pilot users said the platform increased their trust in the IRS.

“They liked their experience with customer support, when they needed to get help from customer support,” Roberts said. “I think is huge for a new product like this that no one had ever seen before.”

Throughout the pilot, taxpayers gave feedback that helped the IRS adjust and improvements to the platform.

Roberts said the agency went through several iterations of an eligibility screener before arriving at a version that most taxpayers liked.

The screener walks taxpayers through several prompts to determine if they are eligible to use the Direct File platform, based on their sources of income and other criteria. However, some taxpayers found the first version’s wording too confusing.

“The first draft of the eligibility screener last year we put in front of taxpayers, and they did not like it. I think everyone sort of hated the approach that we were taking, which was great. I’d rather find that out before we launched it, so our team could go back to the drawing board and really take a look at what we were doing, and simplify the whole screener process, and then put that new version in front of taxpayers,” Roberts said. “They liked that version a lot more throughout the filing season.”

The IRS Direct File team also partnered with state revenue agencies, to provide a seamless experience for taxpayers who also need to file a state return.

“We knew that it was critical that we figure out a way for taxpayers to be able to file both their federal and state returns in a seamless way,” Roberts said. “During the pilot, we were incredibly grateful that we had a number of states who volunteered to go on that journey with us, and see if we could create that seamless experience for taxpayers. What we saw during the pilot was that we were successful in doing that.

‘Digital first’ CX transformation — but not digital only

The IRS, in its Strategic Operating Plan, is mapping out its modernization plans through 2031.

Among its goals, Tamaki said the IRS is pursuing a “digital first, but not digital only” transformation of the taxpayer experience.

“We often talk about digital first, but not digital only. We’re still going to have call centers, we’re still going to have our walk-in clinics. You’ll still be able to talk to a human, if you would like to talk to a human. But I think a lot of times that’s not what people expect. It’s not what people expect in their interactions with other service providers that they have in their life,” Tamaki said. “There is a certain level of convenience for taxpayers, if they don’t have to drive to a place to talk to somebody from the IRS, or if they don’t have to pick up the phone.”

The IRS offers online accounts for individuals, tax professionals and businesses to fulfill their tax obligations and communicate with the agency if they have questions.

“In this day and age, a lot of taxpayers actually prefer the convenience of being able to do it on your own online without having to ever pick up the phone,” Tamaki said.

In addition to making, it easier for taxpayers to interact with the IRS, Tamaki said the agency is also focused on ensuring taxpayers receive the tax credits and incentives they’re eligible to receive.

The IRS is also taking steps to ensure taxpayers can easily resolve any issue that arises after they submit their tax returns.

“We, even as IRS employees, our heart skips a beat when we get a notice from the IRS, for example,” Tamaki said. “We want to make sure that we reduce that stress as much as possible and resolve taxpayer issues.”

Beyond its digital transformation, the IRS is also taking steps to make its correspondence with taxpayers easier to understand.

The IRS is simplifying 200 of the most commonly mailed notices it sends to taxpayers. Tamaki said the IRS is “well past” the halfway point of redesigning those notices.

“What can we do to make sure that the notice the taxpayers receive in the mail is as simple kind of action-oriented short as possible so that taxpayers who receive it can say, ‘OK, I know exactly what the IRS wants from me. I know how to fix this situation quickly,’” Tamaki said.

Discover more about how to elevate your customer experience in the “Excellent, equitable and secure customer experience: A closer look at high-impact service providers” series. 

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