House advances bill to speed tax return processing via barcodes

The House Ways and Means Committee voted unanimously to approve a bipartisan bill that would accelerate processing of tax returns by the Internal Revenue Service through the use of barcode-scanning technology.

The Barcode Automation for Revenue Collection to Organize Disbursement and Enhance (BARCODE) Efficiency Act, co-sponsored by Rep. Brad Schneider, D-Illinois, and Rudy Yakym, R-Indiana, would require the IRS to use barcodes, barcode-scanning technology and optical character recognition (or a similar) technology to digitize certain federal tax return information and correspondence, unless the technology is slower or less reliable than other IRS processes, according to a description on Congress.gov. 

"With just two weeks before the opening of the 2026 tax filing season, taxpayers will unfortunately experience the dire need for modernization efforts at the IRS, especially those who file using paper forms," said House Ways and Means Committee chairman Jason Smith, R-Missouri, during a markup of the bill Wednesday. "Slow processing should not be the punishment for filing on paper. This bill from Representatives Yakym and Schneider speeds up IRS processing of tax returns that are prepared digitally but filed on paper — which will in turn, cut down on delays in Americans receiving their tax refunds."

The bill requires a scannable barcode on electronically-prepared federal tax returns that are printed and filed in paper format with the IRS. It also requires the IRS to use barcode-scanning technology to convert data included on such returns into an electronic format. The IRS would be required to use OCR or a 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, the use of barcodes, barcode-scanning technology and OCR or a similar technology would not be required if such a technology proved to be slower or less reliable than manual transcription or any other IRS process. If that were to happen, the IRS would be required to provide a report to Congress on its decision not to use such a technology.

The bill received a unanimous vote of approval by the committee. "My bipartisan legislation has made it through committee with a 42-0 yes vote and is now on to the floor!" said Schneider in a Facebook post. "The BARCODE Efficiency Act, which I am proud to co-lead with my colleague Congressman Rudy Yakym, will help modernize outdated IRS operations and speed up tax return processing for American taxpayers."

Before the vote, Schneider explained the rationale during the committee markup. "Each year, millions of taxpayers submit their individual returns on paper, and I want to echo the comments of the chairman earlier of the frustrations paper filers, other filers [and] preparers have with the inability to actually get answers from the IRS, to reach a person to talk to, to get the service that they deserve," he said. "And I hope that we can work together on this committee to start investing in improving customer service at the IRS, and that's what this bill is all about. When the IRS cannot capture the data from a return electronically, IRS employees sit at a keyboard and enter that data manually. That manual data entry takes time and increases the likelihood of errors. There is scanning technology, literally from the last century — this is not new technology — scanning technology available that can digitize this process and help the IRS work more efficiently. Many states already use barcoding technology, which would add a scannable barcode containing all the return information that the IRS would then scan upon receipt and automatically capture that data without error or delay."

The BARCODE Efficiency Act would require tax returns that are prepared electronically but filed on paper to include a scannable barcode that will allow the IRS to instantaneously convert that data into electronic format, he noted. "I have long championed investing in IRS modernization to improve taxpayer service, and I'd be remiss if I didn't also mention that the IRS needs sustained funding and a sustained expert workforce to provide that service, to answer taxpayer questions as they come up, and to implement improvements like the ones included in this bill," said Schneider. "I am proud of this commonsense bill that will help modernize outdated IRS operations where it makes the most sense and reduces the backlog for American taxpayers. I am proud that is done in a bipartisan way. I'm grateful for Mr. Yakym and leadership for helping us move this forward."

Yakym had recorded his own Facebook video for his constituents earlier this month about the bill when it was introduced. "It's a bipartisan, commonsense bill that will require the IRS to be able to scan in your tax return if you have to mail in a paper copy," he said. "Right now, there's literally someone that sits there at a keyboard and manually enters every single number on your tax return if you're forced to mail in a copy. That is grossly inefficient. This will make the federal government operate faster and more efficiently. It will also ensure that you get your tax refund faster. It's your money, and you deserve it. You're entitled to it." 

The National Taxpayers Union issued a statement of support for the bill prior to the markup, saying, "This is something that the IRS should be doing already, and typically would not require the passage of a law to make happen. However, the IRS has lagged in modernizing operations for years, leading to delays in return processing, as well as late responses to taxpayer correspondence. For example, in 2024, over 66% of taxpayer correspondence received a response over 45 days after IRS receipt. And, at the conclusion of the 2025 tax year, 3.8 million tax returns remained unprocessed. While the IRS has worked to implement more digitization in its operations, its full implementation is long overdue."

A similar bill with the same name was introduced in 2024 in the Senate. The IRS began pilot-testing scanning technology several years ago in response to a backlog of millions of unprocessed paper tax returns that built up at its facilities during the pandemic, prompting National Taxpayer Advocate Erin Collins to issue a rare Taxpayer Advocate Directive in 2022 urging the IRS to use scanning technology. However, the IRS halted the program later that year as it worked to get the tax software industry to agree on a common format, resulting in an appeal by Collins to IRS leaders to reconsider their decision to delay implementation of the technology.