Yes, the IRS is actively implementing technology to scan paper returns, moving away from manual data entry, with a goal to digitize all paper returns upon arrival by the 2025 filing season, using Inflation Reduction Act funds for this "paperless processing initiative" to improve efficiency and accuracy. While they've used some scanning for business forms for years, the big push is now for individual returns (Form 1040s) to be converted to digital form by scanners and data extraction software as soon as they arrive, rather than being manually keyed in.
Generally, the IRS aims to process tax returns and issue refunds within 21 days, particularly for returns filed electronically. Sometimes, refunds can be issued in as little as 10 days. However, paper filed returns may take four weeks or more due to manual processing.
One of the problems is that the IRS has not had the technology to digitize a paper tax return or form. Instead, an IRS employee manually enters each digit from the form into the agency's system – a process that resulted in transcription errors on about 22% of paper returns in 2021.
The IRS maintains that filing returns electronically can prevent mistakes and lower the odds of an audit. The error rate for a paper return is 21%.
Check your federal tax return status online
If you file a complete and accurate paper tax return, your refund should be issued in about six to eight weeks from the date IRS receives your return. If you file your return electronically, your refund should be issued in less than three weeks, even faster when you choose direct deposit.
Taxpayers can start checking on the status of their return within 24 hours after the IRS acknowledges receipt of an electronically filed return or four weeks after the taxpayer mails a paper return. The tool's tracker displays progress in three phases: Return received. Refund approved.
Here are 12 IRS audit triggers to be aware of:
Unreimbursed employee expenses are perceived to be one of the most common IRS red flags. The IRS frequently reviews unreimbursed employee expenses in audits, as they are widely considered a high abuse category for W2 employees.
But what if you're filing a paper return? If you're filing a paper copy of your tax return, the IRS won't technically reject it because of missing or incorrect information. However, your return won't be considered as filed until it's corrected.
Using a reputable tax preparer – including certified public accountants, enrolled agents or other knowledgeable tax professionals – can also help avoid errors.
E-filing is the best way for most people to file taxes, but there are cases where you may be forced to paper file. For instance, if your return has been rejected multiple times or you need to complete a form that cannot be e-filed.
The IRS conducts audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or at the taxpayer's home, place of business, or accountant's/representative's office (field audit). Remember, you will be contacted initially by mail.
Not reporting all of your income is an easy-to-avoid red flag that can lead to an audit. Taking excessive business tax deductions and mixing business and personal expenses can lead to an audit. The IRS mostly audits tax returns of those earning more than $200,000 and corporations with more than $10 million in assets.
Your bank records have been served with an IRS summons even though you volunteered to provide those records to the IRS yourself. You have been audited and are in regular contact with an IRS agent. The agent then disappears for weeks at a time and will not return your calls.
Use the IRS Where's My Refund tool or the IRS2Go mobile app to check your refund online. This is the fastest and easiest way to track your refund. The systems are updated once every 24 hours. You can contact the IRS to check on the status of your refund.
Most e-filed returns are processed within 21 days. – Paper-filed returns generally take 6 to 8 weeks for the IRS to process and send your refund.
When the IRS cannot capture the data from a tax return electronically, IRS employees must enter the data from paper- filed returns manually.