The Internal Revenue Service (IRS) is issuing an alert regarding the 2026 tax filing season, warning millions of Americans that taxpayers can expect major delays and issues. Even after a widely successful 2025 filing season, the agency is confronted by extreme operational risks in the form of steep staff reductions, impending tax law changes, and aging technology systems. National Taxpayer Advocate Erin M. Collins called on the IRS and Congress to move quickly to prepare for potentially a bumpy tax season.
Successful 2025 filing season masks emerging risks
The 2025 filing season for taxes was termed by the IRS “one of the most successful filing seasons in recent memory.” The IRS received close to 141 million individual tax returns, with over 138 million computed and processed and over 95% filed electronically. Close to 62% of those returns were for refunds. But the IRS had to hold over 13 million of them for further reviews, resulting in the delay of refunds for the majority of taxpayers.
Although the 2025 filing season went smoothly in general, the National Taxpayer Advocate’s mid-year report to Congress observes that the IRS is under growing challenges that compromise the success of the 2026 filing season.
Dramatic workforce reductions threaten IRS capacity
The most critical problem is likely the 26% decrease in IRS employees as of January 2025. The workforce decreased from 102,000 to fewer than 76,000 through June of 2025. The decline encompasses steep reductions in the key areas of Information Technology (IT) and Taxpayer Services, which experienced decreases of 27% and 22%, respectively.
These reductions were partly due to a “deferred resignation” program within President Donald Trump’s Department of Government Efficiency (DOGE), headed by Elon Musk, which gave buyouts to thousands of IRS workers. The agency is also experiencing an anticipated 20% budget cut and loss of Inflation Reduction Act funding, a 37% cut from this time last year.
The personnel shortage jeopardizes the IRS’s ability to:
- Reprogram processing systems for new tax law
- Process returns and make refunds on time
- Handle taxpayer phone calls and mail
- New seasonal and permanent workers get trained ahead of the 2026 season.
Difficult tax law changes put more on the burden
Adding to the staffing crisis are sweeping tax law revisions that will take effect in the near future, especially through the House’s “One Big, Beautiful Bill” bill sponsored by President Trump. On the list of provisions to be effective retroactive to tax year 2025 are:
- Prohibiting Employee Retention Credit (ERC) claims made after January 31, 2024
- Repealing the IRS Direct File pilot program
- Other complicated revisions requiring speedy revisions of IRS forms and systems.
These retroactive changes place the burden on the IRS to rapidly reprogram processing systems and revise guidance to taxpayers and tax professionals, further straining an already limited workforce.
What taxpayers can expect in 2026
Taxpayers can expect to be affected by:
- Lengthened refund delays due to temporarily suspended returns and backed-up processing
- Processing delays of tax returns from under-resourced IT and Taxpayer Services units
- Decreased call center assistance, making it more challenging to receive timely answers
- More errors and misunderstandings about new and retroactive tax law provisions
More requests from taxpayers, as in the past after significant tax legislation overhauls, that will need additional manpower and upgraded electronic capabilities for effective handling.
Call for immediate early planning
National Taxpayer Advocate Erin Collins underscored the urgent need for quick action: “With the 2026 filing season just ahead under the specter of pending legislation changes and ongoing staffing limitations, early preparation is key to enable the IRS to provide quality taxpayer service and secure operations.”
Despite the looming danger, through mid-2025, the IRS had not begun decisive recruitment and training action required to mitigate the threats. Collins called for:
- Mass recruitment and training of thousands of new employees
- Speeding up IT system upgrades to handle new tax codes
- Prompt and decisive taxpayer guidance on legislative changes
- More digital tools to reduce call center volumes.
Read more: Can’t pay your taxes? Here’s how to set up an IRS payment plan
