Yes! IRS Begins Scanning 940s

In IR-2023-41, the IRS announced that it’s off to a good start with the digital scanning of Form 940, Employer’s Annual Federal Unemployment Tax Return. In addition to contracts with industry partners, the IRS is using Treasury's designated financial agents to scan as they process incoming payments. This will soon transition to include the scanning of Form 941, Employer’s Quarterly Federal Tax Return and, eventually, the 1040.

"This expansion of scanning is another milestone for the IRS as we work to transform the agency," said Acting IRS Commissioner Doug O'Donnell. "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."

TXCPA’s Federal Tax Policy Committee urged Congress in August 2022 to require that the IRS implement modern technology for processing tax returns. The committee’s letter supported the National Taxpayer Advocate's push that scanning technology be in place by the start of the 2023 filing season.

Scanning should alleviate the reported 20% error rate due to manually processing the estimated 8 million paper returns that the IRS receives annually.

In a recent report, Putting Taxpayers First, the IRS committed to developing secure and sustainable solutions to improve the taxpayer experience by leveraging industry expertise to digitize paper inventories.

Welcome to the 21^st century!

NTA Blog: IRS Deputy Commissioners Respond to Taxpayer Advocate Directive on Scanning Technology; National Taxpayer Advocate Appeals Decision to IRS Commissioner - TAS