What's Happening?
The Internal Revenue Service (IRS) is experiencing significant staffing challenges as it enters the 2026 tax filing season. According to a Treasury watchdog memo, the IRS has lost approximately 19,000 employees due to workforce cuts, resulting in a backlog
of around 2 million unfinished items in major return-processing inventories. The agency has only managed to hire 50 of the 2,200 approved new staff for critical processing roles. This understaffing is expected to cause delays, particularly for returns requiring manual review, such as paper filings or those flagged for identity verification. Additionally, the IRS has reduced its phone service target, with only 70% of callers expected to get through, down from 85% last season.
Why It's Important?
The staffing shortages and backlogs at the IRS could have widespread implications for taxpayers across the United States. Delays in processing tax returns may lead to longer wait times for refunds, impacting individuals and families who rely on timely refunds for financial planning. The reduction in phone service levels could also frustrate taxpayers seeking assistance. Furthermore, the IRS's decision to phase out paper refund checks in favor of electronic payments could complicate matters for those without direct deposit information, potentially delaying refunds by weeks. These challenges highlight the need for improved resource allocation and efficiency within the IRS to ensure taxpayer needs are met.
What's Next?
The IRS is encouraging taxpayers to file electronically and opt for direct deposit to minimize delays. The agency is also relying on online tools to assist taxpayers, reducing the need for phone inquiries. However, the success of the 2026 tax season will largely depend on how well the IRS manages more complex cases that require manual intervention. The agency's ability to address these challenges will be crucial in maintaining public trust and ensuring the smooth operation of the tax system.
