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IRS destroyed 30 million tax documents due to delays; how does it affect you

An audit by the Treasury Inspector General for Tax Administration (TIGTA), released on May 4, revealed that the Internal Revenue Service (IRS) made a deliberate decision to "destroy approximately 30 million filed information return documents on paper in March 2021", due to the inability of the tax agency to catch up with the delays in returns filed on paper.

The report does not say that the IRS destroyed taxpayers' 1040 income tax forms. Only information returns used to support tax forms were destroyed, the report said.

"The IRS uses these documents to conduct post-processing compliance comparisons to identify taxpayers who are underreporting their income," the document reads.

Common information returns include Forms W-2, 1099, 1098, and Form 1099-MISC, among others.

The IRS explained to TIGTA that it couldn't process the forms because it took the system it uses to schedule updates offline in preparation for the next filing season.


With the supporting documents destroyed, the IRS may lack information to properly verify the accuracy of the returns, and may also end up without enough materials for tax audits.

However, the IRS may require taxpayers to provide relevant evidence or copies of documents used to support their tax returns, including copies of files the IRS may have destroyed.

But the fact that the IRS requests these documents again means more delays for taxpayers who have applied for incentives such as the Earned Income Tax Credit. The tax agency tends to review these tax forms in more detail.

To request the new information, the IRS will have to send notices to the taxpayer, which already involves weeks of waiting and processing.

Refund checks will take six to nine months to arrive for taxpayers who filed their taxes in paper form during the 2022 filing season, something that would also affect those who filed an amendment before receiving their refund and those who made mistakes when filing. reconcile Child Tax Credit payments, according to testimony from national taxpayer advocate Erin Collins during a House subcommittee hearing last month.

If you receive Notice CP07, it means the IRS has received your tax return and is holding your refund until you complete a more extensive review. You may receive this notice if you claim certain benefits or deductions. In this case, you can expect your refund to arrive later than average.

If the agency finds no problems, your refund could arrive within six to 12 weeks. But if the IRS finds problems with your return, it will send you a notice with instructions on what to do within that same period. That means you'll get your refund months later than you expected.

While paper returns have been a major component and cause of the IRS return processing backlog in general, delays were most critical during the spring 2020 pandemic closure of processing centers. TIGTA described the internal logistical hurdles of simply storing and retrieving all that paper.

Documents are typically stored at a Federal Records Center, run by the National Archives and Records Administration. But the IRS often needs them for post-filing review of a taxpayer's return. The IRS then sends a request to a Federal Records Center. As of December 31, 2021, there were more than 2,000 pending applications. And the IRS as of the same date had 8.9 million returns waiting to be sent to a center.

"The chief operating officer of the National Archives and Records Administration stated that tax records requests are one of the three largest types of backlog requests handled by the National Archives and Records Administration. He estimated that it will take several years to comply with the existing and pending applications," reported TIGTA.


Unfortunately, the tool only shows the status of the most recently filed tax return within the last two tax years, according to the IRS. So if your 2021 return has been processed, it won't show the status of the prior year's refund.

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