Barcode Automation for Revenue Collection to Organize Disbursement and Enhance Efficiency Act

Floor Speech

Mr. Speaker, I rise in support of H.R. 6956, the BARCODE Efficiency Act, which I am proud to introduce with my friend and colleague, Representative Yakym from Indiana.

This bill would help expedite the digital transition at IRS, requiring the IRS to implement scanning technology to speed up paper return processing. In tax year 2023, the IRS reports that around 7 percent of tax returns were filed on paper. Now, 7 percent may sound like a small number, Mr. Speaker, until you realize it represents approximately 10 million paper returns to be opened and processed. That is more than the entire population of New York City, our most populous city. In fact, that is more than the population of all but 10 U.S. States.

This bill will help expedite the process of these 10 million returns by directing the IRS to adopt barcode scanning and optical character recognition, or OCR, technology.

For those wondering why this bill is necessary, you only need to learn about the current intake process for paper returns in the IRS. Millions of Americans still use paper returns, including both returns prepared electronically but printed and filed on paper and any handwritten returns and paper correspondence.

Currently, when a paper return arrives at the IRS, an employee manually transcribes the data into IRS systems line by line by line by line. This process is not only time-consuming, it is costly and often inaccurate. Data entry errors from manual transcription are common and cost the American taxpayers money.

Return processing delays translates directly into refund delays, needlessly causing financial hardship for taxpayers with limited savings or fixed incomes.

Data transcription errors can lead to prolonged disputes, and the issues compound from there. A data entry error can cause math error notices requiring taxpayers to respond to the IRS if they disagree with the adjustments made. Errors also cause taxpayers to wait even longer for resolution, requiring more documentation from the taxpayer, more calls, and more correspondence to the IRS as delays continue to build. These extra steps all add to the backlog at the IRS costing all taxpayers more money and eroding trust in the overall tax system.

The good news is that we have a solution. The BARCODE Efficiency Act will require the IRS to implement scanning technology and dramatically reduce the number of paper tax returns that require manual data entry, thereby accelerating processing and improving taxpayer service.

IRS' problems with digitization and processing paper returns have long been an area of focus for the National Taxpayer Advocate, which listed the IRS' challenges in processing and digitization as the first and second most serious problems at the IRS in last year's annual report to Congress.

I, again, extend my appreciation to my friend, Representative Yakym, for his partnership working to address this problem with commonsense solutions. I thank Chairman Smith and Ranking Member Neal for their support of this bipartisan legislation.

I also extend my thanks to the Taxpayer Advocate Service for their recommendation that led to the creation of this bill and for their critical, ongoing work to reduce taxpayer burden and improve the IRS' performance.

I am proud that this bill has the support of both the National Taxpayers Union and the American Coalition for Taxpayer Rights, the national trade association made up of retail tax preparation and tax software companies.

I am proud that we are here today to advance this seemingly modest, bipartisan bill that will have an outsized impact to improve service at the IRS.

I have long championed investing in modernization at the IRS to improve taxpayer service and make government more efficient. The archaic, manual transcription process that IRS currently uses to process paper returns results in significant delays that can last months or even years and cause severe hardship.

It is long past time that the IRS implement scanning technology to improve the speed and accuracy of processing these returns. Implementing a modernization process is a commonsense change with bipartisan support that will reduce refund delays, all the while lowering administrative costs.

No matter how Americans file their taxes--digitally or by paper--they should be able to rely on timely resolution and quality service from our IRS.

I urge my colleagues to support this bill, and I yield back the balance of my time.

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