The Internal Revenue Service has scanned more than 120,000 paper Forms 940 for reporting unemployment taxes since the start of 2023, a twenty-fold increase over that of all 2022 — and it plans to expand soon to scanning 1040 income tax returns for individuals as well as 941s for an employer's quarterly tax returns, as part of its Digital Intake scanning initiative.
"We anticipate expanding scanning of more paper returns in the near future, saving time and creating efficiencies for taxpayers, the business community as well as tax professionals and the IRS," said Acting IRS Commissioner Doug O'Donnell in a statement. (The Senate just confirmed the next commissioner — see
By scanning and electronically processing paper returns, the IRS will be able to shorten the processing time for taxpayers who file paper returns. Backlogged processing of paper returns has been a complaint against the IRS through recent seasons.
The IRS has been using various technologies to scan returns for more than 35 years, but recently took a leap forward by leveraging cutting-edge technologies that enable it to digitize more paper for downstream processing and storage, resulting in greater efficiencies and improved data management.
After a transfusion of funding from the Inflation Reduction Act, the IRS has hired more than 5,000 new telephone assistors and added staff and hours to IRS Taxpayer Assistance Centers, among other measures that include expanding the Document Upload Tool and other features.
The Document Upload Tool is used to e-collect information from taxpayers who receive a request for more information concerning one of nine notices — the CP04, the CP05A, the CP06 and CP06A, the CP08, the CP09, the CP75, the CP75a or the CP75d — with plans to add more notices soon.
The IRS is also working to expand e-processing with the Treasury's Bureau of the Fiscal Service and Lockbox Financial Agents.
