The just-wrapped 2026 tax submitting season served as an vital reminder {that a} taxpayer’s expertise with the IRS more and more relies on whether or not they file electronically or nonetheless depend on paper.
The IRS has made restricted progress in decreasing a paper backlog that prices the federal government a whole lot of hundreds of thousands of {dollars} per 12 months in curiosity — and critics say the problem is getting worse, not higher, as time goes on.
In a memo to IRS management heading into tax season, the Treasury Inspector Basic for Tax Administration, or TIGTA, cautioned that “general stock ranges in key return processing applications have elevated attributable to efforts to cut back workers and the federal government shutdown.” At the moment, IRS inventories of returns and correspondence, a lot of them paper, have been 129% bigger than earlier than the pandemic.
They have been additionally up greater than 32% from December 2024, earlier than the IRS lost greater than 1 / 4 of its workforce below the Trump administration’s push to chop federal spending. Regardless of thinner staffing ranges, IRS officers insist the company nonetheless delivered “premier service” to taxpayers this tax season.
However former IRS commissioner Danny Werfel says the paper backlog is the place individuals might begin to see the cracks.
“I’ve heard in numerous conversations that I’ve had all through our tax system, whether or not it is preparers or filers or different stakeholders, that … if you’re coping with the IRS in paper, it’s materially tougher than it has been in the previous couple of years,” Werfel tells Cash.
If this stock is not processed in a well timed approach, refunds will be delayed and taxpayers can discover themselves caught ready months and even years for assist and solutions. This will get costly quick: Federal regulation sometimes requires the IRS to pay taxpayers curiosity when refunds are issued greater than 45 days previous the submitting deadline. Based on the TIGTA report, the IRS paid over $2.6 billion in curiosity within the 2025 processing 12 months.
Prior to now, the IRS blamed its “outdated technological ecosystem” for the backlog; in 2023, the company reported that a few of its techniques for processing tax returns date again to the Nineteen Sixties. Though paper tax returns have traditionally required guide entry by IRS staff, TIGTA famous that the IRS just lately chosen 4 contractors to digitize a part of its stack of paper-filed returns.
The company clearly believes fashionable expertise is the answer. However within the subsequent few weeks, Werfel says he’ll be wanting to see information on the standing of the paper backlog. (In an e mail to Cash, TIGTA stated an interim report on the 2026 submitting season might be launched in June.)
“The IRS did surprisingly properly in quite a lot of completely different areas. The expertise works, and for a lot of taxpayers, they’d a clean submitting season,” Werfel says, attributing the success partially to Biden-era expertise enhancements. “The place there actually [are] extra acute efficiency challenges is with respect to the paper backlog.”
When Cash reached out to the IRS for an replace on the paper backlog and a response to Werfel’s feedback, spokesperson Stacy Engle declined to reply questions. As an alternative, she directed us to 3 sources that mirror the company’s response to the problem.
Submitting statistics by the week of Might 1 present that about 140 million returns have been acquired by digital submitting. Paper returns look like within the ballpark of three.5 million to 4 million; nonetheless, the IRS wouldn’t affirm an actual quantity.
This time final 12 months, the IRS had already acquired about 5.8 million paper returns, suggesting that taxpayers may very well be listening to the company’s pleas for them to make the swap. (The IRS has been warning taxpayers that submitting a paper tax return might result in a wait of six or extra weeks to get a refund.)
Engle additionally steered Cash to written testimony from IRS CEO Frank Bisignano to the Senate Finance Committee. In it, Bisignano wrote that the federal government’s goal is to modernize the IRS right into a “digital-first company” or, as he additionally calls it, a “Digital IRS.”
He stated “outdated paper processes” value the IRS roughly $450 million in fiscal 12 months 2025, which he goals to chop to $20 million by 2029 utilizing automation, new insurance policies and redesigned processes.
However participating with the IRS digitally cannot occur in each state of affairs. Amending a tax return, for instance, can require paper, and as of early Might, the IRS was nonetheless working by amended 1040s acquired in February. Different taxpayers lack web or laptop entry and depend on paper because of this.
Engle pointed Cash to a web page monitoring processing occasions for numerous kinds of paper varieties and correspondences. These are among the notable paper processing occasions as of Might 1:
The information is combined: Whereas the IRS seems to be on high of particular person tax returns, id theft victims who submitted Kind 14039s are dealing with among the longest waits.
General, it is nonetheless too early to inform how a lot the paper backlog could swell this 12 months. However what the IRS is not saying is nearly as attention-grabbing as what it’s. Though the IRS needs to maintain the dialog targeted on its digital efforts, those that are a bit extra old style — or compelled to make use of paper for no matter motive — are rising impatient.
As Nationwide Taxpayer Advocate Erin Collins stated in her “2026 Targets” report back to Congress, the IRS ought to present taxpayers with a number of handy choices for submitting varieties and corresponding with the company.
“‘Digital first’ doesn’t imply ‘digital solely,'” Collins wrote. “Digital entry ought to develop service, not restrict it. Taxpayers ought to nonetheless be capable of name, stroll in or use mail providers.”
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