How does the irs process mailed returns
The Internal Revenue Service (IRS) processes mailed tax returns in a systematic and efficient manner. Here's an overview of the process:
- Receipt and Sorting: The IRS receives and sorts mailed tax returns at one of its processing centers, which are located in Andover, Massachusetts; Austin, Texas; Covington, Kentucky; and Kansas City, Missouri.
- Barcode Scanning: The IRS uses barcode scanners to quickly identify and sort returns by category (e.g., individual, business, etc.). This helps to prioritize processing and reduce errors.
- Data Entry: IRS employees manually enter the tax return information into the IRS's computer system, known as the Master File. This process is called "data entry" or "keying."
- Verification: The IRS verifies the accuracy of the data entered by comparing it to the original return. This includes checking for errors, omissions, and inconsistencies.
- Processing: The IRS processes the return, which includes:
- Calculating the tax liability or refund.
- Applying any credits or deductions.
- Determining if the return is eligible for an audit.
- Refund Processing: If the return shows a refund, the IRS:
- Verifies the refund amount.
- Issues a refund check or direct deposit (if elected).
- Sends a confirmation notice to the taxpayer.
- Audit Selection: The IRS uses various methods to select returns for audit, including:
- Random sampling.
- High-risk indicators (e.g., large deductions, unusual income).
- Industry-specific audits (e.g., construction, healthcare).
- Audit Notification: If a return is selected for audit, the IRS sends a notification to the taxpayer, which includes:
- A letter explaining the reason for the audit.
- A request for additional documentation or information.
- Appeals: If a taxpayer disagrees with an audit finding or penalty, they can appeal the decision to the IRS Appeals Office.
- Final Processing: After all processing steps are complete, the IRS updates the taxpayer's account and sends a final notice, which includes:
- A summary of the return processing.
- Any remaining balance due or refund amount.
The IRS aims to process 90% of individual tax returns within 6-8 weeks and 90% of business tax returns within 8-12 weeks. However, processing times may vary depending on the complexity of the return, the volume of returns, and other factors.