BARCODE Efficiency Act
The BARCODE Efficiency Act would require a larger portion of paper tax filings to be digitized automatically. Specifically, electronically prepared tax returns that are printed and filed on paper would need to include a scannable code (a barcode) so that the IRS can convert the form’s data into electronic format by scanning. If a return cannot be processed this way, the IRS would instead use optical character recognition (OCR) to transcribe the information from paper documents or correspondence. There are defined exceptions if the Treasury Secretary determines the technology is slower or less reliable than alternatives, with a required congressional report on any exception. The law establishes phased effective dates, with different start times for individual, estate, gift, and other tax returns. In short, the bill aims to accelerate and automate the IRS’s data entry from paper filings by standardizing barcodes on certain paper returns and mandating OCR for others, thereby improving efficiency and reducing manual transcription.
Key Points
- 1Electronic returns that are printed and filed on paper must include a scannable code (barcode) that, when scanned, converts the return’s data into electronic form.
- 2The IRS is required to use barcode scanning technology to extract data from these barcode-enabled paper returns.
- 3For returns not electronically prepared or where barcode data cannot be accurately captured, or for paper correspondence (excluding already electronically received items), the IRS must use optical character recognition (OCR) to transcribe the information.
- 4An exception process allows the Treasury Secretary to delay the barcode/OCR requirements if the technology is slower or less reliable than manual transcription or other methods; any such exception requires a congressional report within 30 days of the determination.
- 5The bill sets phased effective dates for different types of returns and timeframes after enactment: individual income tax returns (and others) begin 180 days after enactment; estate and gift tax returns begin 24 months after enactment; all other returns and correspondence begin 12 months after enactment.