Paper forms cost government $38.7B annually says US Chamber of Commerce

The use of manual, paper-based processes costs the federal government $38.7 billion annually due to information capture and processing bottlenecks, according to a U.S. Chamber of Commerce report released Monday.

Digitizing forms would reduce the materials and staff hours required to process them, and agencies processed 9,858 unique forms and more than 106 billion total between September 2021 and August 2022, the chamber’s Technology Engagement Center found.

Agencies spend nearly $143 billion on information collections annually for everything from tax returns to passport issuance, but some lack the funding for digital modernization that would both cut costs and reduce the 10.5 billion hours the public spends completing government paperwork each year.

“Increased government digitization doesn’t just mean saved time and money,” said C_TEC President Jordan Crenshaw in a blog. “It also means providing greater accountability and access to underserved communities when it comes to utilizing government services.”

In failing to provide online COVID-19 vaccination cards, the government ensured there’s no uniform means of accessing that information across providers and states — disadvantaging citizens required to provide it for travel or employment. Similarly digitizing driver’s licenses would not only make accessing that information more convenient, but mitigate the risks of losing or damaging them and daily transactions, according to the report.

The IRS’ Taxpayer Advocate Service calls paper tax returns “kryptonite” due to the backlog of millions of unprocessed returns and the fact it took eight months to process them in 2021 — costing the agency $3 billion in interest. That’s in spite of the fact the process is more than 95% digitized already.

“We are a paper-based organization operating in a digital world economy,” IRS Commissioner Chuck Rettig told C_TEC.

C_TEC recommends Congress use its oversight authority to identify impediments to agencies’ IT modernization and fund solutions, as well as review the agencies’ establishment of working capital funds to finance projects. Additional funding should be appropriated to the Technology Modernization Fund, the report adds.

“As we continue to deal with future crises and disruptions, digitization will build resilience into the federal system,” the report reads. “Ultimately, if government can’t perform its basic functions efficiently and effectively, it fails and loses the trust of the people who depend on its services.”