Summary
Makes the IRS use scannable codes and other tech to automatically read paper tax forms and mail, which helps speed up processing and reduce errors.
What problem does this solve?
The IRS spends a lot of time and money manually typing information from millions of paper tax forms, causing long delays and mistakes. This bill requires using scanning technology to automatically digitize paper documents, making the process much faster and more accurate.
What does this bill do?
Reference
Text:
Section:
Sec. 2(a)
Header:
Returns prepared electronically and submitted on paper
Adds scannable codes to some paper returns
Requires that tax returns prepared with software but printed and mailed must include a scannable code. The IRS will use scanners to read these codes and instantly get the data.
Uses scanning for all other paper mail
Requires the Internal Revenue Service to use Optical Character Recognition (OCR) technology to scan and digitize handwritten tax returns and any other paper mail it receives.
Allows for exceptions
Lets the Secretary of the Treasury opt out of using the new technology if it is proven to be slower or less accurate than typing things in by hand. This decision must be reported to Congress.
Sets different start dates
Rolls out these changes over time. The rules apply to individual tax returns first, then other mail, and finally to estate and gift tax returns over a two-year period.
Who does this affect?
- Taxpayers who file paper returns
- Internal Revenue Service (IRS)
- Tax preparation software companies
What is the real world impact?
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Modernizes the IRS
Aims to update the agency's outdated, paper-based systems with modern technology. This will help reduce the massive backlog of unprocessed returns and correspondence that has built up over the years.
•
Speeds up tax refunds
By automating the data entry for paper returns, helps the IRS process them much faster. This could mean that taxpayers who file on paper get their refunds sooner.
When does this start?
The new scanning rules will be introduced in stages for different types of tax forms and mail over several years.
Individual income tax returns
Applies to returns received on or after January 1 of the first calendar year that begins more than 180 days after the bill becomes law.
Other returns and correspondence
Applies to all other documents received on or after January 1 of the first calendar year that begins more than 12 months after the bill becomes law.
Estate and gift tax returns
Applies to returns received on or after January 1 of the first calendar year that begins more than 24 months after the bill becomes law.