Speed Up Paper Tax Returns Process

Processing paper returns is a tedious,
time-consuming process, and the pandemic led to an unprecedented backlog of
paper returns at the IRS. As the
senators note in the letter, “For taxpayers due a refund, an IRS backlog
means refund delays and possible financial hardship.  For others, the backlog means the
unavailability of tax transcripts necessary to secure a loan or employment.”

In March, the National Taxpayer Advocate
(NTA) recommended the IRS implement 2-D barcoding for paper tax returns, which
would concisely encode relevant data and import it in digital form into the
IRS’s computer systems, bypassing time-consuming manual data entry and
streamlining the process. However, the IRS has signaled it is unlikely to do
so. 

• Millions of taxpayers need their refunds. 2-D barcoding will help efficiently process
  millions of tax returns and speed up taxpayer refunds.
• It is affordable and the IRS has the funds. The American
  Rescue Plan of 2021 earmarked $1.86 billion toward the IRS to, among other
  things, provide taxpayer assistance, including $1 billion specifically for IT
  modernization. Entering into 2022, only $98.5 million of the $1 billion was
  spent. In 2017, the IRS estimated the cost for implementing 2-D barcoding
  technology was $8.3 million.
• There is an urgent need to address the problem
  now, not in five years.
• Stop chasing technological perfection. If we were to wait for the promise of better
  technology, nothing would ever get implemented. 2-D technology has been tested
  and is less expensive, and many states currently use it.
• 2-D barcoding will likely pay for itself. Faster processing means faster refunds. The
  result will be improved taxpayer outcomes and a reduction in the billions of
  dollars the IRS pays in interest.

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