The IRS has announced the successful expansion of the digital scanning initiative also known as Digital Intake. The Service has already scanned more than 120,000 paper Forms 940 since the start of 2023, which is a twenty-fold increase compared to all of 2022. The digital scanning initiative will expand soon to include scanning of Forms 1040 as well as Forms 941. In addition to contracts with industry partners, the IRS is also working with Treasury’s Bureau of the Fiscal Service and Lockbox Financial Agents to expand the reach of this work.

Current scanning initiatives currently underway at the IRS cover:

  • Digital Intake with Lockbox: Lockbox Financial Agents (FAs) are banks that specialize in payment processing. Each year, taxpayers send payments and associated forms to these Lockbox banks. The Lockbox project works to scan paper returns on-site, and e-file those returns.
  • Digital Intake with Industry Partners: This process extracts machine-readable information from paper tax returns and then e-files those returns.

By providing a capability to scan and electronically process paper returns, the IRS will be able to shorten the processing time for taxpayers who file paper returns.