New Bill Aims to Speed Up IRS Processing by Bringing Barcode Tech to Paper Tax Returns

As the 2026 tax season approaches, lawmakers are renewing efforts to address longstanding frustrations with slow IRS processing of paper tax returns — a problem that delays refunds for many taxpayers. One proposed solution is the Barcode Automation for Revenue Collection to Organize Disbursement and Enhance (BARCODE) Efficiency Act, which has been advancing through Congress.  

The BARCODE Efficiency Act would require that federal tax returns, even when printed and mailed in paper form, include a scannable barcode if they were prepared electronically. This barcode could be read by machines at the IRS to immediately convert the form into a digital record, eliminating the need for manual data entry into IRS systems. For tax returns and other documents prepared completely on paper, the IRS would be required to use optical character recognition (OCR) or similar scanning technology to digitize the information.  

Currently, when paper returns arrive at the IRS, employees often transcribe the information by hand — a slower process that contributes to backlogs, longer wait times for refunds, and increased risk of errors. Supporters of the bill argue that adopting widely used technologies such as barcodes and OCR, already common in the private sector and some state tax systems, would modernize IRS operations and make processing faster and more accurate without raising taxes or expanding IRS authority.  

The House Ways and Means Committee recently approved the legislation unanimously, signaling bipartisan support for the modernization effort. Committee leaders emphasized that taxpayers who choose to file on paper should not be penalized with slower service when technology exists to speed processing. 

To ensure the new approach actually improves efficiency, the bill would require the Treasury Department to report back to Congress if barcode scanning or OCR turns out to be slower or less reliable than current methods. The law also phases in requirements over time for different kinds of returns to give the IRS a practical timeline to implement the changes.