The IRS's Massive Paper Problem (And How They're Fixing It)

For decades, the IRS has been drowning in paper. We're not talking about a few filing cabinets—we're talking about 200 million pieces of paper flooding into IRS facilities every single year. That's roughly 76 million paper tax returns and forms, plus another 125 million pieces of correspondence, notice responses, and miscellaneous forms that taxpayers mail in.

To put that in perspective, if you stacked all that paper, you'd have a tower reaching roughly 12 miles high. Every. Single. Year.

The Hidden Cost of All That Paper

Processing this ocean of paper wasn't just an environmental nightmare—it was a logistical and financial catastrophe. The IRS employed 6,500 workers just to handle paper processing, at an annual cost of $450 million. And that's not counting storage.

The agency maintains more than 1 billion historical documents in warehouses, costing taxpayers $40 million per year just to keep the lights on and the climate controlled. These aren't ancient scrolls we're preserving for posterity—they're tax returns from the 1990s gathering dust in case someone needs them for an audit.

Why So Much Paper in the Digital Age?

You might wonder: doesn't everyone e-file now? Not quite. While the majority of Americans do file electronically, millions still mail in paper returns. Some prefer the old-school method. Others don't have reliable internet access or the technical know-how to navigate tax software.

But here's the real paper generator: correspondence. When the IRS sends you a notice and you respond, that's paper. When you dispute a charge, request a payment plan, or file an amended return—more paper. The agency also receives mountains of documentation from third parties: employer verification forms, proof of income, supporting documents for deductions.

The 2025 Paperless Revolution

In 2023, IRS Commissioner Danny Werfel announced an ambitious plan: complete paperless processing by Filing Season 2025. This isn't just about asking people to e-file—it's about digitizing every piece of paper the moment it arrives.

The strategy involves:

• Advanced scanning technology that can digitize documents in real-time as they're received
• Automated data extraction that reads forms and inputs information without human typing
• Expanded online tools like the Document Upload Tool, which has already accepted over 1 million taxpayer submissions
• Partnerships with contractors like Iron Mountain to scan 20 million paper-filed returns annually

By mid-2024, the IRS had already scanned more than 2 million documents using upgraded equipment. The new scanners experienced less than 1% downtime by September 2024—a huge improvement from the 5-7% failure rate of older machines.

What This Means for Taxpayers

Faster refunds. The IRS estimates that going paperless will cut processing times in half and expedite refunds by several weeks. Paper returns currently take 6-8 weeks to process; digital processing can turn that around in days.

Fewer errors. When humans manually type information from paper forms into computer systems, mistakes happen. Automated scanning and data extraction dramatically reduces these errors.

Better service. Those 6,500 employees currently shuffling paper? They can be reassigned to answer phones, resolve disputes, and provide taxpayer assistance—areas where the IRS has been notoriously understaffed.

The Bottom Line

So no, the IRS doesn't process 2 billion pieces of paper—that number is wildly inflated. The real figure is around 200 million pieces annually. But even that was too much, which is why the agency is racing toward a paperless future.

If the initiative succeeds, by next tax season the IRS might finally escape its reputation as a bureaucratic paper mill stuck in the 1970s. And taxpayers might actually get their refunds before they've already spent the money in their heads.