The Australian Taxation Office sends more than 140 million letters and messages to Australians each year, using almost 3000 correspondence templates.
But a Tax Ombudsman review examining six commonly used templates found many people still find some of the letters confusing or too technical, and their tone can cause unnecessary stress and anxiety.
"We've all received a letter from the ATO at some point and wondered what on earth it was about," Tax Ombudsman Ruth Owen said.
"The ATO focuses on what it wants to say, not what the taxpayer needs to know, without thinking about how the letter will be read or interpreted."
Ms Owen noted the direct language used "can sometimes seem threatening and imply guilt or assign blame to the reader".
The report referred to a 2023 campaign where the ATO wrote to recipients about historical debts, whose tone independent federal MP Andrew Wilkie described as having "more than a whiff of Robodebt".
The ATO was ultimately forced to pause the campaign.
She explained that the sampling of letters examined found the ATO assumes the reader has good technical tax knowledge, proficiency in English and understands all the terms being used.
The 44-page report, which drew on the analytical skills of a plain language expert, also concluded the ATO's letters lacked empathy for the reader in some circumstances.
Some of the ATO letters exhibited "lengthy, complex sentence structures and illustrated how they reduce readability", the expert said.
The ombudsman added the letters could be couched in language and terms that could better support culturally and linguistically diverse audiences, First Nations people and people living with disability.
The extensive examination also found letters were not always going to the right taxpayer.
It recommended the office could better work with taxpayers and tax agents to ensure letters were sent to the right address.
The ATO accepted all four recommendations by the ombudsman to improve its letter writing.
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