The IRS began the 2026 tax filing season Monday with 27% fewer employees than it had a year ago, raising concerns about delays for millions of taxpayers who need assistance as the agency implements over 100 new tax law changes, according to National Taxpayer Advocate Erin Collins’s annual report to Congress.
The workforce dropped from approximately 102,000 employees in early 2025 to around 74,000 by year’s end, bringing staffing to levels last seen in October 2021. The reductions affected nearly every IRS function, including Taxpayer Services, which lost close to 9,000 employees—a 21% cut from 42,122 to 33,264.
Collins’s own department, the Taxpayer Advocate Service, lost nearly 500 employees, a reduction of more than 25% from 1,971 to 1,475.
The Perfect Storm Scenario
“Entering 2026, the landscape is markedly different,” Collins wrote. “The IRS is simultaneously confronting a reduction of 27% of its workforce, leadership turnover, and the implementation of extensive and complex tax law changes mandated by the One Big Beautiful Bill Act, many of which apply retroactively.”
The One Big Beautiful Bill Act, signed by President Donald Trump last summer, introduced more than 100 changes to the Tax Code. Many provisions apply retroactively to 2025 and require reporting on 2025 tax returns that taxpayers are filing now.
These changes include new deductions for tip income, overtime pay, and auto loan interest, along with an increased standard deduction, higher exemptions for seniors, and expanded state and local tax deduction limits. But the provisions come with complex eligibility rules and phaseouts that will be difficult to administer during the filing season.
The retroactive nature creates unique hurdles. Taxpayers who already filed 2025 returns may need to amend them, and the IRS must update forms, programming, and guidance on the fly.
Who Will Feel the Impact
Collins acknowledged that most taxpayers who file electronically and use direct deposit will receive refunds seamlessly. Last year, the IRS processed over 165 million individual income tax returns, with 94% submitted electronically.
“For the significant majority of taxpayers who file their returns electronically, who include their direct deposit information, and whose returns are not stopped by IRS processing filters, the process will be seamless,” Collins wrote. “Their returns will be processed quickly, and if they are due a refund, they will receive it without delay.”
But she added a crucial caveat: “The success of the filing season will be defined by how well the IRS is able to assist the millions of taxpayers who experience problems.”
About 11 million taxpayers filed on paper last year—6% of all returns. They face the longest wait times. In 2025, approximately 3.6 million taxpayers received their refunds beyond the IRS’s normal processing time, with an average wait of 7 weeks for electronic filers and 14 weeks for paper filers.
Identity theft victims face even longer delays. Collins noted that hundreds of thousands of taxpayers waited an average of more than 21 months for the IRS to resolve their cases and issue refunds. She has previously called these delays “unconscionable” and recommends keeping identity theft victim assistance employees focused exclusively on that work until average case resolution drops to 90 days.
Workforce Cuts Stem From DOGE Initiative
The staffing reductions stem from Trump administration initiatives via the Department of Government Efficiency, including firings, layoffs, and buyouts. In 2025, buyouts were deferred until after filing season, which helped processing run smoothly. But in 2026, key customer service staff departed before the season began.
IRS CEO Frank Bisignano told the agency’s 74,000 remaining employees in a letter that he is “confident that with this new team in place, the IRS is well-prepared to deliver a successful tax filing season for the American public.” Treasury Secretary Scott Bessent has promised “substantial tax refunds.”
But Diana M. Tengesdal, deputy inspector general at the Treasury Inspector General for Tax Administration, warned that staffing at 2021 levels plus unprocessed returns mean “initiatives to offset staffing losses may not yield expected benefits during the 2026 Filing Season.”
Refunds By the Numbers
Approximately 104 million taxpayers—63% of all filers—received refunds last year, with an average refund amount of $3,167. The IRS anticipates processing around 164 million individual returns by the April 15 deadline.
For lower-income taxpayers, refund delays can create or exacerbate financial hardships. Many rely on refunds for essential expenses or to pay down debt.
The IRS is also phasing out paper checks, pushing taxpayers toward direct deposit. The agency is pursuing a Zero Paper Initiative to outsource paper return processing, though Collins highlighted data security risks with that approach.
Recommendations for Improvement
Collins’s report outlines the ten most serious problems facing taxpayers, including refund delays, outdated paper processes, and insufficient measures for telephone service quality.
Historically, the IRS has used a Level of Service telecommunication metric, but the report recommends eliminating that in favor of a broader set of measures reflecting the taxpayer experience.
The report proposes several legislative recommendations, including expanding the Tax Court’s jurisdiction, improving support for Low Income Taxpayer Clinics, and requiring timely processing of credits and refunds. Collins’s complete “Purple Book” contains 71 recommendations.
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Taxpayer Advocate foresees tax season challenges at IRS | Accounting Today