How hard can it be to scan these in? Turbotax, CashApp, H&R Block all accept PDF scans to import 1099INT, 1099DIV, or W2 form data.
IRS could require those sending paper to switch to sending PDFs instead (if you can print to paper, you can print to PDF in 2024 - plus that’d save stamps, paper, ink, and lost documents) then import them the same way current tax software already can. Worst case, that system would work for the vast majority of paper forms they get and they’d handle manually the rest. Give them until end of Feb - most people don’t file early anyway - to take advantage of this pre-populate feature.
It’s the IRS. The sheer volume is most likely this biggest issue, followed by just updating a system to do something it wasn’t designed to do. As of 2023, they require businesses of a certain size to file 1099s electronically (this was my first year doing it at work and we paid a 3rd party), but I don’t know the timeline on requiring every business to do it.
I think this is a big factor. They know that many, if not most people don’t include all of their income that would show up on a 1099 if they don’t get a 1099. And since 1099s are only required for vendors being paid for services of $600 or more, a LOT of that money is unreported by businesses (legally) and by individuals (illegally). If the IRS didn’t require everyone that isn’t really running a small business to fill out a schedule C and pay payroll taxes for their business income, there would probably be more compliance on the sort of stuff that would be reported on a 1099 under $600.