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IRS Panel Recommends Major Tax Changes That Would Impact Millions

Proposed IRS changes might make filing your taxes easier and safer.

By Chris Lewis, CEPF , Edited by Becca Borawski Jenkins

Updated Nov. 10, 2026

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Filing your taxes each year provides an important checkup on your financial health, and new proposals may make filing easier.

In June 2026, the Electronic Tax Administration Advisory Committee (ETAAC) released its annual report with 18 recommendations for Congress and the IRS. Those recommendations focused on modernizing and improving the tax system through key elements like AI and digital services, and changing how Americans file and pay taxes each year.

While the proposals are not yet law, they could affect millions of Americans if they're implemented. Here are some of the proposals most likely to affect you and how you could prepare yourself financially.

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Electronic W-2 delivery

The report recommended that Congress and the IRS allow W-2 forms to be delivered to employees electronically by default. Currently, paper W-2s may be mailed to outdated addresses, increasing the risk of identity theft and tax refund fraud. In contrast, employees tend to keep their email addresses regardless of physical relocations.

The ETAAC recommended that the IRS expand default electronic delivery of W-2 forms while allowing employees to opt out and choose paper delivery. The report emphasized the importance of implementing strong identity verification requirements with this move to default electronic W-2 delivery. Default delivery may save you time, prevent your W-2 from being sent to the wrong address, and help protect you against fraud.

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Improved IRS online accounts

The report called for improved IRS online accounts, which could reduce your need to call or mail a letter to the IRS. The report noted that some online accounts still lack certain functionality and consistent reliability, and it calls on the IRS to improve its online systems.

This recommendation suggested that the IRS publish guides and create a technical support line to help tax filers learn how to navigate its online systems, including how to access technical support and resolve issues they may encounter.

Other suggestions included encouraging the IRS to conduct user research to identify how to address online bottlenecks and to streamline its communication about online accounts, allowing these tools to reach their full potential. Such improvements to the online accounts might make it easier for you to find the information you need online, avoiding a phone call to the IRS.

Faster and clearer e-file error codes

The ETAAC also recommended that the IRS review and update its list of e-file error codes to make those codes clearer for tax filers. Understanding why a tax return was rejected may be difficult using the current rejection codes, since they're sometimes unclear and might lack information on how to fix the errors to resubmit the return. Tax filers may have to call the IRS to get extra information on how to fix the issue.

Revising the codes so they're clearer and provide more information might make it easier to identify and fix an error on your own, saving you the time and hassle of calling the IRS.

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AI-assisted fraud detection and identity theft protection

According to the report, the current fraud detection systems often have false positives and long backlogs. Since low-income individuals are disproportionately affected by identity theft, they're more likely to be flagged by the system for potential identity theft. These individuals may be relying on their tax refunds to cover essential purchases, making the issue a pressing one.

To address the issue, the report encouraged using AI to develop stronger fraud detection and identity theft protection protocols. For example, reinforcement learning could reduce false positives in IRS fraud filters, easing the burden on both IRS staff and taxpayers.

Stronger oversight of paid tax preparers

The ETAAC's report also called for increased regulation of non-credentialed tax return preparers, many of whom have no formal training or experience. Since there aren't requirements to be competent at tax preparation or to follow industry best practices, they might take advantage of or harm taxpayers.

The report recommended that the IRS establish minimum standards for paid tax return preparers, such as passing a background check, passing a tax compliance check, and completing required education. Such requirements might better help protect taxpayers who rely on tax preparers to be well-informed and knowledgeable.

The Crapo-Wyden Taxpayer Assistance and Service Act could also give the IRS greater authority to oversee paid tax preparers. The bipartisan legislation would establish new requirements for preparers, including competency standards and continuing education, to help protect taxpayers from errors and fraudulent tax filings.

The Senate unanimously passed the bill on September 30, 2026, but it still needs House approval and presidential action before becoming law. Until then, the proposed requirements are not in effect.

A push for funding

The recommendations also strongly emphasized the importance of sustained funding for the IRS. "Recent workforce reductions and budget uncertainty have strained the IRS's ability to meet expanding responsibilities, including implementation of major legislative changes," the report read.

The report encouraged Congress to provide stable funding to support key needs, such as technology modernization and taxpayer service. "Without sustained investment, the IRS will be unable to complete critical system upgrades, retain technical talent, or meet growing service expectations," the report warned.

Stable, multi-year funding might help reduce backlogs and delays, making the process of filing your taxes and receiving your tax return smoother.

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Bottom line

The ETAAC report is advisory, meaning the IRS may decide whether to implement any operational changes, and Congress may address the legislative recommendations. Any accepted recommendations could take time to implement, but the report emphasizes the need to modernize the IRS and deliver a better, more streamlined experience for taxpayers.

Changes like faster filing tools and stronger fraud protection could eventually reduce filing frustration, making it easier to get your return and put extra cash in your pocket.

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