America’s tax system is powered by infrastructure that too often belongs to another era — and small businesses are bearing the consequences. Across the IRS, outdated technology, paper-based workflows, and incomplete digital systems slow processing, create confusion, and delay critical refunds that businesses rely on to operate and grow.
In some cases, that even includes relying on fax machines to transmit sensitive taxpayer information, a striking example of a much larger modernization failure.
For American workers and small business employers who dutifully file every April, these outdated processes aren’t just frustrating. They undermine security, slow processing, and increase the likelihood of lost or duplicated forms. If private firms operated this way, they would quickly lose customers. Yet the agency responsible for collecting 96% of federal revenue continues to rely on antiquated systems that make compliance harder and more costly.
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This isn’t a fringe complaint. Two authoritative reports — one from the Government Accountability Office, released in February, and the Annual Report to Congress from the National Taxpayer Advocate — make a compelling case that modernization is a necessity.
The GAO’s latest review of IRS operations resurfaced lessons learned from its oversight of the employee retention tax credit during the COVID-19 pandemic. As of June 2025, the IRS had processed nearly 5 million claims, but the inability to automate critical processes left the agency overwhelmed, leading to delays that left taxpayers in the lurch. GAO found that, had the IRS had more robust automation and data-capture systems in place, outcomes for both taxpayers and tax administration would have been better. The report recommends including amended employment tax returns in modernization efforts and automating processing to save costs and accelerate refunds.
Likewise, the National Taxpayer Advocate’s annual report underscores how outdated paper processes and procurement delays harm taxpayers. Among the “most serious problems” it identified was the harm caused by antiquated IRS systems that require paper forms, manual intervention, and incomplete digital services — all of which erode trust, slow service, and increase costs for the agency and taxpayers alike.
Modernization would also equip dedicated IRS employees with the tools they need to succeed in the 21st century. Currently, these employees are stuck with outdated equipment, which leads to manual data entry, paper handling, and redundant processes. That slows their work, increases frustration, and makes it harder to recruit and retain the talent the service needs.
The National Taxpayer Advocate’s findings show that digitalization doesn’t just help the IRS — it helps the families and businesses who depend on timely refunds, clear guidance, and transparent processes. Modernization would make filing and interacting with the IRS faster, more secure, and more reliable. It would improve customer service, reduce call-center bottlenecks, minimize manual errors, and protect sensitive taxpayer data. It could also reduce compliance burdens on small businesses and tax professionals, improving overall economic productivity.
Yet, despite billions invested in modernization over recent years, progress has been uneven. Previous GAO reviews have flagged critical legacy information technology systems that remain antiquated, and the agency has at times paused or reprioritized projects midstream without completing the groundwork necessary to move forward confidently. The result is a patchwork of improvements that leaves taxpayers still waiting for the IRS they deserve.
Retiring the fax machine would be a symbolic first step, but the larger goal is durable infrastructure that reflects the scale, complexity, and importance of American tax administration. Modern IT would enhance accuracy and responsiveness while allowing the IRS to leverage secure digital tools, including real-time data sharing and electronic submissions, that taxpayers expect and already use in other parts of their financial lives.
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Congress should build upon bipartisan consensus — reflected in both federal watchdog reports — to ensure IRS modernization remains a priority, is properly funded, and is rigorously overseen.
Americans may grumble about taxes, but they deserve an IRS that meets them where they are — in the digital age. Retiring the fax machine isn’t just a clever slogan. It’s about fairness, efficiency, and modernizing a cornerstone of our civic life. Let’s not put it off any longer.
Casey Clark is the president and CEO of the National Association of Professional Employer Organizations.