H.R. 6956: Barcode Automation for Revenue Collection to Organize Disbursement and Enhance Efficiency Act

The "Barcode Automation for Revenue Collection to Organize Disbursement and Enhance Efficiency Act," also known as the BARCODE Efficiency Act, aims to improve the efficiency of the Internal Revenue Service (IRS) in processing federal tax returns and correspondence. The bill proposes the following key measures:

1. Electronic Tax Returns on Paper

For federal tax returns that are prepared electronically but submitted on paper, the bill requires that these paper returns include a scannable code. This code, when scanned, will convert the printed information back into electronic format. The IRS is mandated to use barcode scanning technology to facilitate this conversion, ensuring more efficient data entry and processing.

2. Optical Character Recognition for Paper Documents

For tax returns that are not prepared electronically (i.e., entirely paper-based), as well as for any correspondence received by the IRS in paper form, the bill requires the use of optical character recognition (OCR) technology. This technology aims to transcribe the information from paper documents into electronic format, which helps streamline the IRS's operations further.

3. Exceptions to Technology Requirement

The bill provides an exception in cases where the Secretary of the Treasury (or their delegate) determines that the technologies described (barcode scanning or OCR) are slower or less reliable than manual transcription methods or other existing processes. If such an exception is made, a report must be submitted to congressional committees outlining the justification for the exception.

4. Effective Date

The provisions of the bill would apply as follows:

• For individual income tax returns received on or after January 1 of the first year that is more than 180 days after the bill's enactment.
• For estate tax returns or gift tax returns received on or after January 1 of the first year that is more than 24 months after enactment.
• For any other tax returns or correspondence received on or after January 1 of the first year that is more than 12 months after enactment.

Overall Goal

The overall goal of the BARCODE Efficiency Act is to enhance the efficiency and accuracy of the IRS's tax return processing, helping to modernize and streamline the agency's operations in response to the growing volume of paper submissions.

Relevant Companies

• INTU (Intuit Inc.): As a company that provides tax preparation software and services, Intuit could be affected as users adapt to the new requirements for barcode inclusion in paper submissions.
• HRB (H&R Block, Inc.): H&R Block, a tax preparation service, may need to adjust its practices and technology to comply with the new law regarding the automation of tax return submissions.