The National Taxpayers Union Foundation (NTUF) has long recommended that the Internal Revenue Service (IRS) improve its customer service, protect taxpayer rights, and advance badly-needed modernization efforts. Several of these recommendations overlap with those in the newest annual report from the Electronic Tax Administration Advisory Committee (ETAAC). ETAAC serves as an advisory board that monitors and evaluates IRS electronic tax administration issues and makes recommendations.
ETAACs 2025 report includes 14 recommendations for Congress and the IRS for tax administration, 10 of which mirror recommendations from NTUF’s Taxpayers For IRS Transformation (Taxpayers FIRST) project. However, other proposals raise concerns or could use refinement.
IRS Advisory Committees as Proponents of IRS Transparency and Reform
ETAAC is one of several advisory committees providing the IRS with insight from outside experts to help improve tax administration. Others include:
Internal Revenue Service Advisory Council (IRSAC), which advises the IRS, reviews existing tax policy, and recommends new tax policies and operational improvements.
Taxpayer Advocacy Panel (TAP), which is a group of 75 citizen volunteers who listen to taxpayers, identify taxpayers’ issues, and make suggestions for improving IRS service and customer satisfaction.
IRS Art Advisory Panel, which reviews and evaluates property appraisals submitted by taxpayers in support of the fair market value claimed in works of art involved in federal income, estate, and gift tax cases.
ETAAC provides “continuing public input into the development and implementation of the IRS organizational strategy for electronic tax administration.” It researches, analyzes, and provides recommendations on a wide range of electronic tax administration issues, such as identity theft and refund fraud. The ETAAC also provides constructive observations about current or proposed policies, programs, and procedures for the IRS. Its members represent various segments of the tax professional community including tax practitioners and preparers, tax software developers, large and small businesses, employers and payroll service providers, individual taxpayers and consumer advocates, the financial industry, system integrators, academia and estates, tax exempt organizations, and state and local governments.
Many Reforms from ETAAC’s Annual Report Receive Support from NTUF
Among the ETAAC’s 14 recommendations from its 2025 annual report, there are 10 overlapping with NTUF-supported reforms to better assess the tax gap, improve IRS customer service, and effectively accomplish modernization plans.
Recommendation 1: Congress should consider tax simplification when implementing tax policy goals for efficient tax administration and federal budgetary savings.
NTUF’s work on tax complexity recognizes that a simpler code can improve compliance, reduce administrative burdens, and lower costs for both taxpayers and the IRS. In our annual study of tax complexity, we recommend that the IRS submit regular reports to Congress identifying provisions in the tax law that are particularly difficult for administration or compliance. This would help lawmakers target specific areas for simplification, paving the way for a more efficient tax system and better use of agency resources.
Recommendation 2: The IRS should coordinate with relevant stakeholders—state tax agencies, Free File partners, and Volunteer Income Tax Assistance (VITA)/Tax Counseling for the Elderly (TCE) programs—to share and analyze real-time data from all free-to-file options (Direct File, Free File, VITA, TCE) in order to improve customer service, conduct timely fraud prevention, and have parity with data generated from other filing options.
NTUF has called for greater transparency and coordination between the IRS and its partners to improve taxpayer outcomes and reduce administrative burdens. In our report “Call to Action: Crafting a New Taxpayer Service Experience,” we urged the IRS to go beyond high-level performance metrics and adopt more meaningful, outcome-based data to evaluate programs and taxpayer service tools.
Recommendation 3: The IRS should improve communication, outreach and education around tax law and implementation changes including TCJA expiration, 1099-K and others.
NTUF has emphasized that better taxpayer services and improved taxpayer education is a way to boost voluntary compliance. In our taxpayer service recommendations, we urged the IRS to quantify the benefits of enhanced outreach and education. NTUF has also been a leading voice in advocating for the repeal of the confusing and burdensome $600 1099-K threshold. Our analysis and outreach contributed to the successful reform in the One Big Beautiful Bill Act, which restored a more reasonable standard.
Going forward, we encourage the IRS to provide timely, plain-language guidance to help taxpayers navigate the tax system and avoid unnecessary confusion or penalties.
Recommendation 4: Congress should provide predictable funding to the IRS for efficient and effective taxpayer service.
Stable, accountable funding for core IRS functions, particularly for taxpayer services and modernization, helps the Service plan to make improvements over the short and medium-term. Although the Inflation Reduction Act (IRA) provided $80 billion to the IRS over a decade, most of this money was reserved for enforcement, motivated by lawmakers’ desire for an “offset” to ambitious new spending proposals. Moreover, the IRA provided little guidance to the IRS on how to use this money apart from the specified program areas. This is one reason why we have recommended that the IRS quantify the impact of improved taxpayer services and education on voluntary compliance.
Along with funding, the IRS needs guidance and clear performance expectations. We have emphasized the need for Congress to prioritize investments in areas that directly benefit taxpayers, such as answering phones, processing returns, and improving digital services. We have also urged lawmakers to tie future appropriations to transparent metrics, outcome-based performance goals, and regular reporting to ensure that additional funding leads to measurable service improvements.
Recommendation 5: The IRS should review and update its current list of Modernized e-File (MeF) reject codes and explanations to provide greater clarity regarding the cause of and how to resolve the reason for the rejected return.
We have, as noted above, advocated for greater transparency and plain-language communication from the IRS to improve taxpayer experience and reduce unnecessary compliance burdens.
Recommendation 6: The IRS should update tax return forms to enhance security, combat fraud, identity theft and ghost preparers, and improve taxpayer understanding of tax return requirements.
This overlaps with NTUF’s recommendation that the IRS provide timelier and clearer guidance on tax compliance.
Recommendation 7: The IRS should accelerate its successful deployment of human-centered design principles in new applications to taxpayers and tax professionals to increase efficiency and reduce compliance costs.
ETAAC highlights how the IRS has made significant progress in adopting human-centered design (HCD)—an iterative, user-focused approach that incorporates direct feedback and usability testing to improve products and services. ETAAC recommends that the IRS expand its use of HCD across more programs, in order to “build with taxpayers, not for taxpayers.”
This is a commendable approach and stands in contrast to more heavy-handed actions the IRS has taken, such as its 2024 “midnight regulation” weakening safeguards against field agents assessing penalties on taxpayers without supervisor approval. That rule diluted a critical statutory protection intended to protect taxpayers from coercion and raised serious concerns about the Service’s priorities.
ETAAC cites the Direct File pilot as a positive example of human-centered design in action. However, as NTUF’s review of the program noted, the pilot was narrowly targeted—available only in 12 states and limited to basic tax situations—and offered fewer features than many private-sector alternatives. Expanding the program to more common and complex tax situations would entail a significant cost. Worse, a Freedom of Information Act request by the Taxpayers Protection Alliance revealed numerous internal complaints about Direct File’s functionality and accessibility. Moreover, the duplicative Direct File program was built without explicit congressional authorization and diverted resources from long standing priorities at the agency.
The IRS should apply the HCD approach to improving other functions such as telephone service, closing the gap in its estimates of out-of-pocket expenses associated with tax forms, and producing reports to Congress on where tax code administration is overly complex and can be simplified.
Recommendation 8: The IRS should have additional tools to combat scams and schemes promoted on social media and other communication platforms.
Getting in front of these schemes—particularly those proliferating online—can help protect taxpayers from financial harm and reduce the downstream burden on IRS resources and would also help prevent a backlog of identity theft cases, which often take months or even years to fully resolve.
Recommendation 9: The IRS should build on its current efforts to transition taxpayers to digital interactions, including instituting reforms that may limit taxpayer preference.
ETAAC suggests that, when tax returns are prepared electronically, and no technical or accessibility barriers exist, the IRS should consider mandating e-filing regardless of taxpayer preference. They argue this would significantly reduce IRS processing burdens, cut costs, and improve efficiency.
While increasing the use of e-filing can help reduce IRS processing costs, it’s important that the IRS does not overlook taxpayers who lack reliable internet access or prefer paper due to age, income, geography, or other reasons.
At the same time, to reduce paper processing burdens, the IRS should accelerate adoption of optical character recognition technology. As NTUF has noted, improved digitization of paper filings would help the IRS reduce backlogs, lower error rates, and avoid repeating mistakes like the destruction of 30 million unprocessed paper returns.
Recommendation 10: The IRS should proactively disclose its use of Artificial Intelligence (AI) in a clear and simple manner to build public trust in the use of new technologies and enhance its artificial intelligence governance to conserve resources, improve quality control, and gather input from stakeholders.
Similarly, NTUF wrote on the IRS’s use of AI in enforcement and compliance efforts, as well as the issues that this presents. NTUF emphasized that the IRS must ensure that its technology is modernized and updated regularly by properly trained information technology personnel. Further, when AI is used for enforcement and compliance efforts, taxpayers should have access to dispute resolution procedures providing information about why the action was taken and remedies from human assistors.
Recommendation 11: Congress should authorize the IRS to regulate non-credentialed tax return preparers to prevent harm to taxpayers and the tax system.
Proposals to expand IRS authority over tax preparers raise concerns about regulatory overreach, higher costs for services, and potential market shortages. Heavy-handed federal laws could actually compound the problem of “ghost preparers” rather than encourage preparers to partake in continuing education. The IRS’s recent Circular 230 guidance, on which NTUF sounded several cautionary notes, is yet another instance of the need to ensure the government does not intimidate the preparation community. The courts have already ruled that the IRS lacks authority to impose licensing requirements without explicit congressional approval, but Congress should still move thoughtfully and carefully in addressing whatever issues that may exist with non-credentialed preparers. Congress could, for example, create additional sanctions for truly bad actors who improperly alter returns, use invalid preparer tax identification numbers, and engage in poor diligence, provided they are accompanied by prudent guardrails and due process. Transparent guidance and new technologies that could more directly reach out to preparers as they work on complex returns could also improve the quality of the system. The risk of preparer errors (as opposed to willful noncompliance with the law) can be dramatically reduced by simpler tax laws.
Recommendation 12: Congress and the IRS should prioritize continued technology modernization enhancements and policy enhancements for information sharing efficiency and transparency.
This recommendation corresponds to NTUF’s proposals that the IRS accelerate the pace of modernization, produce an enhanced modernization plan with cost analysis, provide more transparent updates and metrics, add a strategic accountability entity to the IRS structure, create a detailed punch list and implementation plan for technology modernization, and publish a dashboard of regular metrics and data to inform decision making.
Recommendation 13: The IRS should eliminate unnecessary filings for extensions that are already automatic.
Currently, taxpayers must file various extension forms—such as Forms 4868, 7004, 8868, 8809, 4768, and 8892—even though these extensions are automatically granted upon submission. ETAAC notes this is redundant, contributes to unnecessary paperwork, and creates confusion for taxpayers. The IRS processes a high volume of these requests annually, diverting time and resources. ETAAC recommends that the IRS stop requiring these filings altogether to reduce administrative burden, improve user experience, increase efficiency, and help prevent avoidable delays.
NTUF agrees that eliminating unnecessary paperwork—especially for actions the IRS already processes automatically—is a common-sense reform that would free up agency resources and reduce friction for taxpayers.
Recommendation 14: The IRS should make it easier for taxpayers who previously filed jointly, and first-time taxpayers, to make tax payments to the IRS.
ETAAC notes that certain taxpayers, such as second filers on joint returns and individuals filing for the first time, face challenges using the IRS’s Direct Pay system due to identity verification hurdles. These issues can force taxpayers to use paper checks or other less efficient methods, even as those options are being phased out.
ETAAC recommends updating Direct Pay to allow these taxpayers to make payments more easily, noting that it was not obvious on the Direct Pay website that taxpayers who are ineligible to use authentication options such as ID.me can still create an account. However, the IRS has since resolved this confusion. Additionally, ETAAC urges the IRS to protect low-income taxpayers from dishonored check penalties by sending pre-withdrawal reminders and allowing grace periods to avoid failed payments.
Conclusion
ETAAC’s recommendations largely provide actionable reforms to improve tax administration. While many proposals align with NTUF’s longstanding priorities—such as reducing complexity, improving transparency, and strengthening customer service—others raise questions about access, oversight, and the proper limits of agency authority.
Several of the recommendations fall within the IRS’s existing administrative authority and could be implemented without additional legislation. Newly sworn in IRS Commissioner Billy Long should prioritize reforms that are truly taxpayer-focused, cost-effective, and respectful of choice and competition.