With the new year underway, the IRS is gearing up to pilot a new scanning system for the 2024 tax filing season that will utilize AI and machine learning (ML) technology to scan tax returns into the agency’s tax processing systems.
The scanning system – dubbed the Modernized Paper Processing System – will combine AI technology with the agency’s existing Service Center Recognition image processing system to speed along the tax filing process, according to a Dec. 20 Treasury Inspector General for Tax Administration (TIGTA) report.
“A centralized oversight of scanning efforts is critical to selecting a scanning solution that will accomplish the IRS’s new transformation goals,” TIGTA said in the report.
The IRS piloted three other scanning services that were used for the 2023 tax filing season, but that did not “reach the [Secretary of Treasury’s] expectation to scan millions of individual tax returns before the end of Calendar Year 2023,” stated TIGTA.
“As of June 30, 2023, the IRS had scanned fewer than 35,000 paper-filed Forms 1040, U.S. Individual Income Tax Return,” TIGTA reported.
The Treasury watchdog report makes two recommendations – both of which the IRS concurred with – to reinforce the success of the scanning programs. Those include evaluating the potential benefits, challenges and costs of each digital scanning service for the 2025 tax filing season, and to develop a detailed plan to measure milestones before the 2025 tax filing season.
“We commend the IRS for making such a bold commitment to modernize paper tax return processing,” TIGTA said. “However, we are concerned with the IRS’s ability to achieve this goal within the desired time frame considering that it has not decided on a final scanning solution and current oversight of the testing efforts is disjointed.”
