BARCODE Efficiency Act
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The bill would require the IRS to put scannable barcodes on electronically prepared tax returns that are printed and filed on paper, and to use optical character recognition to digitize other paper returns and correspondence.
It aims to cut manual data entry at the IRS, though the agency could skip the technology if it proves slower or less reliable and it reports that determination to Congress.
What this bill would do
What it would do
The bill would require that federal tax returns prepared electronically but printed and filed on paper be formatted with a scannable barcode, and would require the IRS to use barcode-scanning technology to convert that data into electronic format. For returns not prepared electronically, or paper correspondence received by the IRS, the bill would require the use of optical character recognition or similar technology to transcribe the documents. The IRS would not have to use this technology if it determines the technology is slower or less reliable than manual transcription or another existing IRS process, but any such exception would only take effect after the IRS reports the determination to the House Ways and Means Committee and Senate Finance Committee within 30 days. The requirements would phase in on different timelines depending on the type of return.
Key provisions
- 1Would require electronically prepared tax returns printed and filed on paper to include a scannable barcode formatted for IRS scanning technology
- 2Would require the IRS to use barcode-scanning technology to convert data from such returns into electronic format
- 3Would require the IRS to use optical character recognition or similar technology to transcribe non-electronically-prepared paper returns and paper correspondence
- 4Would allow the IRS to skip the required technology if it is slower or less reliable than manual transcription or another existing process
- 5Would require the IRS to report any such exception to the House Ways and Means and Senate Finance Committees within 30 days before it takes effect
- 6Would phase in the requirements on separate timelines for individual income tax returns, estate/gift tax returns, and other returns or correspondence
Who would be affected
The Internal Revenue Service, which would have to build and deploy the scanning and transcription systems; tax preparers and software providers who format electronic returns for paper filing; and individual, estate, and gift tax filers who submit paper returns or correspondence to the IRS.
Why it matters
Faster, more automated digitization of paper tax filings could reduce IRS processing backlogs and manual-entry errors that have slowed refunds and correspondence in recent years. The reporting requirement gives Congress oversight if the IRS decides not to adopt the technology for certain filings.
What would change
Changes to existing law
Amends Internal Revenue Code of 1986 (Sec. 2)
Requires the IRS to use barcode and optical character recognition technology to digitize certain paper tax returns and correspondence, subject to exceptions.
Agencies directed to act
Effective dates
- Requirements for individual income tax returns
- Requirements for estate and gift tax returns
- Requirements for other returns or correspondence
Funding and costs
Congressional Budget Office estimate
CBO estimates the BARCODE Efficiency Act would have no significant effect on the federal deficit, with any revenue effect less than $500,000 and administrative costs below $500,000 over the 2026–2031 period.
CBO estimates that H.R. 6956 would have no effect on direct (mandatory) spending over the 2026–2036 period. The Joint Committee on Taxation found the bill would have an insignificant effect, of uncertain direction, on revenues over the same period. CBO expects the bill would largely codify the IRS's existing Zero Paper Initiative and other current practices, increasing the IRS's administrative costs (discretionary spending subject to future appropriations) by less than $500,000 over 2026–2031. CBO identified no intergovernmental or private-sector mandates in the bill.
How implementation would work
The IRS would need to develop or adopt barcode-formatting standards for electronically prepared paper returns and barcode-scanning systems to read them, plus optical character recognition (or similar) technology to transcribe other paper returns and correspondence. If the Treasury Secretary determines any of this technology is slower or less reliable than existing processes, the exception can only take effect after the IRS reports that determination to the House Ways and Means and Senate Finance Committees within 30 days. Requirements phase in on separate timelines for individual returns, estate/gift tax returns, and other returns or correspondence.
Legislative status & sources
Latest action
Received in the Senate and Read twice and referred to the Committee on Finance.
Official CRS summary
Show the CRS summaryHide the CRS summary
This bill requires the Internal Revenue Service (IRS) to use barcodes, barcode scanning technology, and optical character recognition (or similar) technology to digitize certain federal tax return information and correspondence, unless the technology is slower or less reliable than other IRS processes (subject to conditions).
Specifically, the bill requires a scannable barcode on electronically-prepared federal tax returns that are printed and filed in paper format with the IRS. The bill also requires the IRS to use barcode scanning technology to convert data included on such returns into an electronic format.
Further, the bill requires the IRS to use optical character recognition (or similar) technology to transcribe federal tax returns and correspondence received by the IRS that are not prepared electronically and are received in paper format.
However, under the bill, the use of barcodes, barcode scanning technology, and optical character recognition (or similar) technology is not required if (1) such technology is slower or less reliable than manual transcription or any other IRS process, and (2) the IRS provides a report to Congress regarding the determination to not use such technology.
Legislative subjects
Computers and information technology; Digital media; Government information and archives; Tax administration and collection, taxpayers; Taxation
Committee report
H. Rept. 119-508