January 25, 2024

Young, Carper Introduce Legislation to Improve IRS Efficiency and Accelerate the Processing of Tax Returns

WASHINGTON – Today, U.S. Senators Todd Young (R-Ind.) and Tom Carper (D-Del.) introduced the Barcode Automation for Revenue Collection to Organize Disbursement and Enhance (BARCODE) Efficiency Act, legislation that would greatly improve the processing of Internal Revenue Service (IRS) paper tax returns. While the use of e-filing has grown exponentially since its inception, millions of taxpayers choose to file their returns each year on paper. By implementing technology such as 2-D barcodes, the IRS will be able to conserve resources, minimize processing errors, and reduce delays in the distribution of refunds to taxpayers. 

“Millions of Americans are forced to wait months – and sometimes years – for the IRS to process their tax returns,” said Senator Young. “Our bipartisan bill will better serve taxpayers by improving the processing of paper returns, reducing errors, and requiring the IRS to operate more efficiently.”

“As government officials, we have a responsibility to be good stewards of taxpayer dollars. That includes ensuring that tax returns are processed accurately and in a timely manner,” said Senator Carper. “I’m proud to introduce the BARCODE Efficiency Act because this bill implements commonsense technology that will increase the efficiency of the IRS and make a big difference for millions of American taxpayers.”

This legislation would require returns that are prepared electronically and filed on paper include a scannable 2-D barcode that the IRS can use to convert the return information to a digital format to better process paper returns. Over the years, the National Taxpayer Advocate and the Government Accountability Office (GAO) have made similar recommendations to the IRS to improve the processing of paper returns. The 2-D barcode technology has been used by state tax agencies for more than two decades and has been proven to be effective in accelerating the processing of tax returns. Optical character recognition or other functionally similar technologies will serve as a complement to 2-D barcoding to further assist with the processing of paper returns. The archaic, manual transcription process the IRS uses to process paper returns today results in substantial delays and imposes significant costs on the agency, and this bill works well with the agency’s current plans and existing allocated funding to modernize processing protocols to more efficiently process paper returns and clear the backlogs.

The BARCODE Efficiency Act builds on Senator Young’s work to address ongoing concerns about modernizing the IRS. In 2022, Senator Young and other Senate Finance Committee Republicans sent a letter to then-IRS Commissioner Charles Rettig to strongly encourage the agency to implement 2-D barcoding for paper returns in the 2023 tax filing season. Senator Young also sent a letter to then-IRS Commissioner Charles Rettig and penned an op-ed about processing delays at the IRS.

Full legislative text is available here.