IRS Tax Filing Pilot Part of Digital-First Customer Experience Plan

The IRS touted surpassing its goal of having 100,000 tax filers using its inaugural Direct File pilot amid a long-term effort to build a comprehensive digital-first customer experience environment.

“Where we want to go is to be able for folks when they interface with the IRS, [it is the same as] operating like they do with their other financial institutions,” said IRS Program Director Wanda Brown at Wednesday’s Adobe Government Forum in Washington, D.C.

In March, the agency used funds from the Inflation Reduction Act to launch the Direct File pilot that enabled eligible taxpayers in 12 states to file their 2023 federal tax returns online for free. IRS reported last week that 140,803 taxpayers successfully filed returns using the tool and saved $5.6 million in tax preparation fees on their federal returns.

The effort is part of the agency’s plan to transform its digital experience and follows an Office of Management and Budget memo that directs agencies to do so. IRS leaders at the Adobe event this week described how self-service options are improving that experience.

“The thought process there is being able to have more self-service options for our taxpayers, so they can help themselves,” Brown said. “They’re able to pull up their information to be able to see what transactions have taken place, and they’re able to answer the question for themselves based on the data that we make available.”

Officials at the event referenced a movement since the COVID-19 pandemic that changed expectations for how government interfaces with citizens.

“COVID created a space where in both federal and state government — we closed doors, we made people go online to get services, and people started to like it,” said State of Illinois Web Content Management Supervisor Chris Wollesen. “They maybe didn’t like it at first because we weren’t very good at it, but we learned to get good at it. And so now, not only do they want to continue to do that, but they want more.”

Since the first lockdowns in March 2020 coincided with tax season, Brown said IRS adjusted quickly to new capabilities for things like authentication and verification.

“One thing [the COVID-19 crisis] opened up for us was something we call digital flexibilities,” Brown said, adding that the agency changed requirements of a physical signature and enabled digital uploads for documents.

The agency’s digitization efforts really ramped up in July 2020 with a smaller acquisition pilot that then became the Enterprise Digitalization and Case Management Office focused on introducing more automation to digitize paper-based processes at the agency.

IRS IT Digitalization Director Darnita Trower described putting customer needs at the forefront of these efforts.

“It’s an uphill road. The IRS has 1,400 forms in our inventory. We just launched the first 20. We’re looking to accelerate that and move faster to meet the needs of our customers,” Trower said at the event. “We have turned that corner looking at the customer experience … and really understanding what the customer needs before we start going down the path of building [digital services].”

But striving to be a digital-first organization does not mean digital only, she added.

“What we’ve been doing is making sure we have options. [IRS wants to] give taxpayers as many options as possible and meet them where they are,” Trower said. “If you still want to send us paper, you can send us paper, we will take it and we will digitize it — we will make the data available.”

This is part of IRS’ Taxpayer 360 plan to provide a holistic view of taxpayer data to both the taxpayer and IRS employees, she added.

The officials noted that such personalized online interactions come with shifting requirements for keeping that data secure to continue building that citizen experience.

“It’s all about the data that you are able to collect and present it in a format in a way that’s secure,” Trower said. “How we centralize that data and what we make available based on all security parameters, so that the taxpayer trusts what we’re providing to them based on how we centralize it and we make that data available.”

Moving forward, IRS is working on a new project to better assess taxpayer feedback.

“It’s really important that we always have the continuous feedback loop from the taxpayer from our employees on the products and services that we’re putting out,” Brown said. “We’re standing up a project that will take advantage of being able to evaluate some of the data, the information that we’ve already received from customers, but being able to put that spin on it from a digital perspective.”

Agencies also can’t lose sight of the employee experience when modernizing the customer experience.

“Your customer experience is only going to be as good as your employee experience,” Trower said.