IRS Implements Enhanced Chatbot Technology to Assist Small Business Owners on Tax Notices


The IRS announced its move to expand chatbot technology to expedite responses to basic questions concerning tax underreporting notifications. For small business owners and taxpayers, in general, this means they will be able to benefit from the Internal Revenue Service’s (IRS) latest push towards digital transformation.

The improved chatbot system will target IRS notices CP2000, CP2501, and CP3219A recipients. These notices are dispatched when there is a mismatch between the tax details provided by taxpayers and the information the IRS receives from third parties.

Driving this technological leap is funding from the Inflation Reduction Act, which is geared towards modernizing the IRS and bolstering its service offerings to the taxpayer community.

IRS Commissioner Danny Werfel emphasized the service’s commitment to making interactions with taxpayers more efficient, stating, “We are working to expand technologies to help taxpayers and tax professionals interact with us in the ways they prefer, including expanded digital, phone, and in-person assistance options.” He recognized the anxiety these notices can provoke and highlighted chatbots’ role in swiftly alleviating concerns.

Why this Matters to Small Business Owners:

Navigating tax notices and the labyrinth of the IRS can be daunting for small business owners. An efficient chatbot system can save time, reduce confusion, and provide quick resolutions, allowing business owners to focus on their operations.

Further, the efficiency of this technology is undeniable. Since its inception in January 2022, IRS voice and chatbots, available in both English and Spanish, have catered to over 13 million taxpayers. This initiative helped avert lengthy wait times and facilitated approximately $151 million in payment agreements.

The chatbot’s mechanism imitates human interaction, responding to real-time queries via web or mobile app interfaces. Connecting with a live representative remains available for those seeking a more human touch.

For small businesses, the chatbot can provide crucial guidance on:

  1. Steps to take upon receiving a notice.
  2. Procedures when more time is needed to address a notice.
  3. Determining if the IRS has registered their response.

This is just the beginning. The IRS is ambitious in its plans to roll out more chatbot features to tackle intricate issues in the future.

The move by the IRS is emblematic of a broader trend: the integration of advanced technology into public services. For small business owners, this means quicker, more accessible, and more efficient ways to navigate tax-related challenges. As the IRS continues to invest in its transformation, made possible by the Inflation Reduction Act Funding as outlined in the April-released Strategic Operating Plan, small businesses can look forward to a more streamlined experience when addressing their tax obligations.

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Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and has been a member of the team for 16 years. A professional journalist with 20 years of experience in traditional media and online media, he attended Waynesburg University and is a member of the Society of Professional Journalists. He has held roles of reporter, editor and publisher, having founded his own local newspaper, the Pottsville Free Press.