Paper Tax Filers Face Long Wait as IRS Digitization Effort Stalls

2025 tax year IRS 1040 individual and schedule C profit or loss from business tax forms lay on a desktop. — (Image credit: Getty Images)

If you plan to file a tax return on paper during the 2026 filing season and are expecting a refund, you’ll likely have to wait a while before you get your money. It will take the IRS four to six weeks to process your return, assuming there are no mistakes in your tax filing.

If you plan to file electronically, as the overwhelming majority of individual taxpayers do, the IRS says your refund would be directly deposited into your bank account within 21 days.

Notably, the tax agency had set a goal to speed up paper return processing in time for the current tax filing season, but it hasn’t materialized. What happened, and what does it mean for you if you want (or need) to file a paper return this year?

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Why does paper return processing take so long?

According to the National Taxpayer Advocate’s Annual Report to Congress, despite 94% of taxpayers filing their tax returns electronically, "tens of millions" of taxpayers still file original paper returns.

During a filing season, besides Form 1040, the IRS receives other types of paper tax forms, such as amended individual returns (Form 1040X) and business payroll Forms 940 and 941, to name a few. Then there’s taxpayer correspondence.

All this paper has to be manually processed. After arriving at an IRS processing facility, employees:

Sort the returns by form type and category, then route them to the appropriate area.
Screen a return for completion, then send the return into the processing pipeline.
Manually key in the numbers from each line of the return into the IRS system.
Send the return to an automated system for validation and error checks.
If the return passes all checks, it’s approved by the IRS. If a refund is due, the money is deposited into the taxpayer’s bank account, or a check is sent to the taxpayer (the IRS is phasing out paper checks in 2026).

It takes the IRS four to six weeks to process an error-free Form 1040 paper tax return. If there are return errors, questions, or if the agency determines a return needs special handling, e.g., if there’s a question of identity theft, the process can take months.

Speeding things up: The Zero Paper Initiative (ZPI)

To address some of those issues, the IRS launched its Zero Paper Initiative (ZPI) in April of last year. According to the tax agency, the project’s goal is to convert paper filings into streamlined digital formats for electronic processing.

Essentially, paper filings, including individual tax returns, would be converted to digital formats by automatically scanning them with machines and extracting the data, which would then be processed like any other electronically filed return.

The IRS has been experimenting, off and on, with electronic processing of paper tax forms for decades, and ZPI is the agency’s latest push. ZPI is especially salient now as it offers the added benefit of helping to offset the loss of thousands of employees in the agency’s submissions processing and account management functions.

As Kiplinger has reported, those IRS staffing cuts resulted in part from the Department of Government Efficiency’s (DOGE) efforts last year to reduce the federal workforce and a hiring freeze imposed on the IRS.

For ZPI, the IRS chose to outsource the scanning work and lined up four private contractors for the pilot. The contracts required a minimum processing threshold of 70,000 returns per vendor per week, which would be scaled up once the threshold was met.

The pilot ran into snags almost from the start, and it wasn’t until December 2025 that one vendor (eventually) reached the minimum processing threshold. It was obvious by then that ZPI wouldn’t be operational in time for the 2026 filing season.

What does this mean for your paper return?

It’s unfortunate for taxpayers who need to file paper returns that ZPI was unable to meet its goal of being up and running by the 2026 tax filing season. The core problem is that:

Form 1040 digitization is not fully implemented.
Schedules and attachments (Forms W-2, 1099, etc.) are largely handled manually.
Amended returns continue to require manual handling.
Non-standard paper submissions (e.g., handwritten) continue to slow down paper flows.

It seems there are two primary reasons why so much of the paperwork still has to be manually processed.

First, there’s the delay in the rollout of the vendor’s scanning equipment. The second is the fact that the IRS’s legacy computer systems can’t reliably process optical character recognition/barcode data. That the submission processing centers are inadequately staffed only magnifies the difficulty of getting returns processed promptly.

If you still plan or need to file a paper Form 1040 this year, you’ll have to be patient above all. Since the forms are being handled manually, calling the IRS to inquire about your refund (if you’re due one) is unlikely to yield a satisfactory answer.
You might not reach an employee due to staffing shortages, or you might be connected to a chatbot.
For the same reason, continually checking the IRS’s Where’s My Refund online tool is also unlikely to give you the information you’re looking for. Manual processing takes time.

What you can do is keep an eye on the IRS’s processing status for tax forms page. You won’t find information about the status of your return, but it will tell you the batch of paper returns currently being processed.

By taking note of the date you mailed your return, you can get a very rough idea of where you are in the queue.

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Roxanne Bland, a self-styled “tax nerd,” has worked in the tax field for over 30 years as a state tax legal analyst. Before joining Kiplinger as a tax writer to help ordinary people make sense of their federal and state tax obligations, Roxanne spent many years covering developments in state tax jurisprudence at the U.S. Supreme Court and worked closely with state revenue agencies to develop uniform tax legislation. She has also contributed to Tax Notes State, a Tax Analysts publication focusing on cutting-edge corporate tax issues.