IRS sees less demand for paper tax forms

• Key insight: Here's why a critical IRS facility is facing pressure to scale down its operations.
• What's at stake: Taxpayers without bank accounts who face lengthy refund delays under new electronic mandates.
• Expert quote: "The Internal Revenue Service National Distribution Center plays a critical role in supporting tax administration by ensuring printed tax products are available when and where they are needed." — Kenneth Corbin, IRS
  

The Internal Revenue Service's National Distribution Center, which stores and sends out printed tax forms, instructions, general notices, publications, posters, signage and other documents, is experiencing a sharp decline in demand for paper tax products, according to a new report.

The report, released Thursday by the Treasury Inspector General for Tax Administration, found that orders for IRS paper products declined over 20% from 2021 through 2025 as the IRS has increasingly pushed for electronic filing. Amid staffing shortages and unavailable processing systems this year, the IRS needed about a month to process paper tax returns this past filing season, double the amount of time last year, due to staffing shortages and unavailable processing systems, according to a separate report released last month by the Government Accountability Office.  

Given declining demand and other IRS initiatives to reduce paper, the TIGTA report recommended the IRS should reevaluate the National Distribution Center's size and scope to reduce its operating costs. The IRS spent about $15.1 million in fiscal year 2025 to operate the NDC.

TIGTA also pointed out several ways to improve inventory management at the NDC. In fiscal year 2025, the NDC disposed of approximately 1.6 million obsolete products that cost over $1 million to scrap. The report acknowledged that some of the factors contributing to excess obsolete inventory are beyond the IRS's control, such as executive orders from the president. However, other contributing factors, such as inaccurate information, are within the IRS's control.

The IRS has made only limited progress so far on its goal of achieving "paperless processing," scanning only a tiny fraction of paper-filed returns last tax season, according to an earlier report released in February by TIGTA. President Trump signed an executive order in March 2025 requiring agencies like the IRS to require electronic payments rather than paper checks from most taxpayers. But that too has led to problems this year, with taxpayers who did not have bank accounts facing extensive delays when their tax refunds could not be deposited electronically by the IRS, prompting the IRS to send out over 1 million notices to taxpayers. Another recent TIGTA report described the obstacles faced by taxpayers who couldn't receive electronic payments of their tax refunds.

The IRS has been emphasizing usage of its website rather than paper products. The new report noted that over 3,100 forms, instructions and publications are readily available on IRS.gov for taxpayers, tax professionals and others to download or print. Both individual and business tax products are available on the website. Browser and mobile-friendly forms, accessible versions for people with disabilities, e-books, and help with forms and instructions are also available on IRS.gov. On Friday, the agency debuted a new IRS mobile app, replacing its older IRS2go app.

"Taxpayers and stakeholders need to access forms, publications and instructions to remain tax compliant," said the report. "It is essential that  the IRS provide multiple options  for taxpayers and stakeholders to obtain products when submitting requests via telephone, fax, mail and through the IRS's intranet and IRS.gov."

TIGTA recommended the IRS do a benefit-cost analysis of NDC operations to determine a future model, improve inventory management and modify its existing additional performance metrics. The IRS agreed with all of TIGTA's recommendations.

"The Internal Revenue Service National Distribution Center plays a critical role in supporting tax administration by ensuring printed tax products are available when and where they are needed," wrote Kenneth Corbin, chief of the IRS's Taxpayer Services Division, in response to the report. "As customer demand has evolved and in alignment with our commitment to become a digital-first agency, we have tailored NDC operations to better align production and inventory levels with current needs. By doing so, we are able to maintain the capability to respond to changing requirements."

Introductory bullet points created by AI with editorial review