ETAAC advised the IRS to enhance security and combat fraud by updating tax return forms, reviewing e-File reject codes, promoting information sharing, and advancing digital taxpayer interactions.

The US Internal Revenue Service (IRS) issued IR-2025-72 on 25 June 2025, notifying that the Electronic Tax Administration Advisory Committee (ETAAC) released its 2025 annual report on 25 June 2025 with 14 recommendations—four to Congress and 10 to the IRS.

The ETAAC operates under the rules of the Federal Advisory Committee Act. It works closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation’s tax industry, established in 2015 to fight tax-related identity theft and cybercrime. ETAAC members represent various segments of the tax community, including individual and business taxpayers, tax professionals and preparers, tax software developers, payroll service providers, the financial industry and state and local governments.

The committee recommended that the IRS update tax return forms to enhance security and combat fraud and identity theft, review and update the current list of Modernized e-File reject codes and explanations, promote greater information sharing between the IRS, states, and industry partners, and build on current IRS efforts to transition taxpayers to digital interactions.

The recommendations to Congress included a request to consider tax simplification when implementing tax policy goals, authority for the IRS to regulate non-credentialed tax return preparers, predictable funding of the IRS for efficient and effective taxpayer service and prioritisation of continued technology modernisation enhancements.

Electronic Tax Administration Advisory Committee Annual Report To Congress 

Executive Summary

This report to the IRS and Congress by members of the IRS Electronic Tax Administration Advisory Committee (ETAAC) presents a robust list of recommendations for improving U.S. tax administration at the federal level in an era of rapidly changing technology and evolving taxpayer needs. At the heart of these recommendations is the joint perspective and alignment of tax practitioners, enrolled agents, state and local tax administrators, and other respected experts from across the tax ecosystem. Members’ real‐world insights underpin this report’s initiatives, ensuring that recommendations are responsive to tax ecosystem stakeholders, taxpayer challenges and the operational realities of the Internal Revenue Service.

Key themes in the report include:

  • Simplification of Tax Administration: Relying on extensive IRS briefings, the ETAAC members unanimously support collaboration between Congress and the IRS surrounding any tax legislation so that changes may be managed to minimize taxpayer confusion and reduce administrative burdens on the entire tax ecosystem, including state and local tax administrators, enrolled agents and other practitioners, and the tax software providers that support electronic submission of data to the IRS. Recommendations include streamlining statutory provisions and eliminating redundant filings, thereby empowering taxpayers to comply more readily and enabling the IRS to reallocate resources to enhance service quality.
  • Sustaining Adequate Funding and Modernisation: ETAAC members unanimously agree that predictable, multi-year funding is vital for maintaining efficient taxpayer services. This report reinforces the need to support critical technological and operational advancements. Modernisation efforts—including master file enhancements, systemic technology upgrades, and process improvements—are included in this report as essential investments that not only reduce inefficiencies but also bolster public trust in the IRS.
  • Enhancing Digital Payment and Filing Processes: The report identifies critical barriers—especially for second filers on joint returns and first-time filers—in using current IRS digital payment platforms. Based on thorough discussions during IRS briefings, ETAAC members concur that adopting user-centred digital solutions can eliminate these challenges. Proposals include updating Direct Pay methodologies, improving online account options, and instituting safeguards to protect low-income taxpayers from undue fees, ensuring every taxpayer can easily meet their obligations.
  • Regulating Tax Preparers and Promoting Transparency: Recognising the potential harm posed by unregulated tax preparers, the ETAAC unanimously recommends that Congress empower the IRS with clear statutory authority to regulate non-credentialed preparers. This measure is intended to raise the quality of tax returns, reduce fraudulent practices, and enhance overall taxpayer protection, benefits that extend to the entire tax ecosystem.
  • Leveraging Human-Centred Design and Advanced Technologies: Emphasising a core principle—“building with taxpayers, not for taxpayers”—the report underscores the transformational potential of integrating human-centred design into IRS digital services. Unanimously agreed upon by committee members, further recommendations advocate for iterative user testing and the strategic deployment of artificial intelligence to create a more transparent, efficient, and responsive tax administration process. These technological enhancements are aimed at reducing delays, minimising errors, and ultimately strengthening taxpayer confidence while maintaining service levels and strict data security and privacy standards.

In summary, the 14 recommendations detailed in this report reflect the perspectives and extensive experience of the members of the 2024-25 ETAAC committee, informed by information provided by the IRS in numerous briefings, and crafted to provide actionable solutions for implementation and improvement. The unanimous consensus of ETAAC members is a critical element of this report, allowing the IRS and Congress to trust that these recommendations have been vetted with a robust collection of stakeholder viewpoints. By pursuing these recommendations, both the IRS and Congress can take definitive steps toward continuing modernisation of our nation’s tax system, protecting taxpayer rights, and securing the integrity of revenue collection for the federal government.