Yes, the IRS is actively moving to scan and digitize paper tax returns as part of a major, multi-year modernization effort supported by the Inflation Reduction Act. The agency is rapidly expanding its scanning technology, aiming to digitize all paper-filed returns upon receipt by the 2025 filing season to reduce 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.
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.
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%. The error rate for returns filed electronically is 0.5%.
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.
Check your federal tax return status online
If you are receiving a tax refund, use the IRS Where's My Refund tool to see if your return was accepted. You can view the status for the past 3 tax years.
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.
Here are 12 IRS audit triggers to be aware of:
Audit risk in 2025 is driven by both individual behavior and IRS algorithms. Common triggers include high income, unusually large deductions, unreported freelance income, filing errors, and business classification issues.
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.
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.
Using a reputable tax preparer – including certified public accountants, enrolled agents or other knowledgeable tax professionals – can also help avoid errors.
After filing your original return, you may determine that you made an error or omitted something from your return. Although the IRS often finds and corrects errors during processing, there are certain situations in which you may need to file an amended return to correct an error or make other changes to your return.
The IRS does not check every tax return. It does not check the majority of them, but the IRS implements methods that track certain factors that would result in a further examination or audit by them.
At a glance: The gift giver pays any gift tax owed, not the receiver. You don't have to report gifts to the IRS unless the amount exceeds $19,000 in 2025. Any gifts exceeding $19,000 in a year must be reported and contribute to your lifetime exclusion amount.
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.
One-time forgiveness, officially known as First-Time Penalty Abatement (FTA), is an IRS program that allows qualified taxpayers to have certain penalties removed from their tax accounts.
Here is a list of things a tax scammer will do but The IRS will never do:
A much higher proportion of Americans living abroad were audited last year than Americans living in the US – 4.3% of international returns were audited compared to just 0.8% of 'domestic' returns. This illustrates that as an expat the audit risk is significantly higher.