The Internal Revenue Service keeps a written clock on tax returns that arrive in envelopes, and during the filing season that ended in April it ran more than twice as long as its own rulebook allows. Congressional auditors who examined the 2026 season found the agency averaged 30 days to process a paper individual income tax return, against an internal standard of 13 working days. Nearly nine million individual and business returns still came in on paper this year, and until one of them is transcribed into an IRS computer, it is not a return the agency can act on and not a refund anyone can chase.
A 13-Working-Day Standard Written Into the Internal Revenue Manual
The 13-day figure is not a target the agency invented for public consumption. It sits in the Internal Revenue Manual, the instruction set IRS employees work from, which directs that Form 1040 paper returns be processed within 13 working days and defines a working day as any Monday through Friday that is not a holiday. The step being timed is narrower than most filers assume. It covers the moment a mailed return is reviewed, prepared and transcribed into an electronically readable record on IRS systems, not the moment money moves.
Against that step, the 2026 average came in at 30 days, according to GAO-26-109074, the Government Accountability Office’s preliminary review of the 2026 filing season, signed by Jessica Lucas-Judy, GAO’s director for tax policy and administration, and addressed to the chairmen and ranking members of the Senate Finance Committee and the House Ways and Means Committee. GAO noted the 30-day average was still shorter than the 2021 and 2022 seasons, when the agency was digging out of a pandemic backlog. What it was not was compliant with the agency’s own policy. And a transcribed return is not necessarily a paid one: once a return enters the processing systems, it can still be stopped for a miscalculated credit, a mismatched Social Security number or suspected fraud before any refund is released.
What a stalled refund actually means: Each status message and each notice points to a different cause, and each cause has its own next step. Read the notice decoder in The IRS Refund Recovery Kit.
Six Weeks With the Individual Paper System Unable to Take 2025 Returns
Two machines stand between a mailed return and an IRS record: one that transcribes returns by hand and one that scans them. IRS officials told GAO that the individual paper processing system could not handle tax year 2025 returns for the first six weeks of 2026, and that the scanning system for business paper returns could not handle them for the entire filing season. The stated cause was not volume. It was the recent loss of experienced IT acquisition staff, which delayed the procurement paperwork needed to program the systems for new tax law changes and for the shift to digital-only refunds.
The agency compensated by shipping work outside. It sent about 3.7 million business paper returns to outside scanning vendors during the season, a 725 percent increase over the 443,000 it sent the year before, and those vendors ultimately handled more than four times what IRS staff processed. Paper volume itself fell: the agency received 8.9 million individual and business paper returns, down 19 percent from 11 million in 2025. Even so, IRS staff processed 46 percent fewer individual paper returns and 80 percent fewer business paper returns than a year earlier.
Submission Processing Ended the Season With 8,111 Staff
The second reason the clock ran long was headcount. The Submission Processing unit, which is responsible for turning returns into records, closed the 2026 filing season with 8,111 employees, 18 percent fewer than the 9,850 it had at the end of the 2025 season. About 2,900 of those staff separated by the end of fiscal year 2025, most through deferred resignation or early retirement offers. Treasury approved the unit to hire 1,600 replacements, but the partial federal government shutdown that ran from October 1 to November 12, 2025 pushed job announcements and hiring events to December, and by early April the unit had brought on 1,158 people, 72 percent of its approved target. Officials told GAO in April that they simply did not have enough staff to process returns on time.
Form 941 Ran 72 Days Against a 32-Day Policy
The delay was worse on the business side, and it reaches ordinary workers through their employers. Form 941, the employer’s quarterly federal tax return, is how a business reports the income tax, Social Security and Medicare amounts withheld from its employees’ pay. Processing time for paper 941s averaged 72 days in 2026, up from 45 days in 2025 and 25 days in 2024, against an Internal Revenue Manual policy of 32 days. A payroll correction, a credit claim or an overpayment refund riding on one of those forms waited more than twice the allowed period before the underlying return even existed in the system.
Paper-Check Refunds Fell to 493,000 and Took 36 Days
A separate squeeze hit filers who do not use a bank account. Under the March 2025 executive order directing the government to stop disbursing refunds by paper check, the IRS announced in January 2026 that taxpayers who supplied no direct deposit information could have their refund held. Those filers were sent a notice giving them 30 days to provide an account number; if none arrived, a paper check would follow after six weeks. About 4.2 million of those notices had gone out as of early May. By early April, the number of paper-check refunds actually issued had dropped more than 80 percent, from 2,816,000 a year earlier to 493,000, and the ones that did go out took an average of 36 days, against 13 days in 2025.
The season was not a poor one by every measure. The IRS processed about 98 percent of the 177 million individual and business returns it received, the same share as the year before, and issued $296 billion in refunds, up $43 billion or 17 percent, with the average refund rising $333. Nine in ten direct deposit refunds arrived within 21 days. The auditors’ point is that the households left outside that system absorbed the whole cost of the year’s breakdowns, and GAO said it is still monitoring the agency’s efforts to notify those taxpayers and send the checks, with a follow-up product planned.
Where the Paper-Return Clock Stops and the Refund Wait Begins
The Internal Revenue Manual’s 13-working-day rule ends the instant a Form 1040 becomes a record in an IRS system. Everything that happens after that point, from a credit recalculation to a suspended refund to a notice asking for bank details, runs on its own timetable and its own set of forms, and none of those timetables appear on the return itself.
The IRS Refund Recovery Kit is a 13-page kit covering the refund-trace steps for Form 3911, a refund status tracker spreadsheet and the 3-year refund deadline.
Open the refund status tracker spreadsheet in The IRS Refund Recovery Kit.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources.
