What's Happening?
The Treasury Inspector General for Tax Administration (TIGTA) has released a report expressing concerns about the upcoming 2026 tax filing season due to significant staffing cuts at the Internal Revenue Service (IRS). Despite successfully navigating the 2025 tax season, the IRS faces challenges with a reduced workforce, particularly in its Information Technology department. The report highlights that the IRS has lost 17 to 19 percent of its workforce in key functions responsible for managing the filing season. Additionally, the IRS is tasked with implementing changes required by the recently enacted One Big Beautiful Bill Act, which will necessitate substantial updates to processing systems. The current government shutdown has further complicated matters, with only five business days of funding remaining for the IRS's 74,299 employees.
Why It's Important?
The staffing reductions at the IRS could have significant implications for taxpayers and the efficiency of the tax filing process. With fewer employees, the IRS may struggle to maintain its service levels, particularly in handling phone inquiries and processing adjustments. This could lead to delays and increased frustration for taxpayers. The need to implement legislative changes with limited IT resources further exacerbates the situation, potentially affecting the accuracy and timeliness of tax processing. The IRS's ability to adapt to these challenges will be crucial in ensuring a smooth tax season and maintaining public trust in the tax system.
What's Next?
The IRS will need to address its staffing shortages and IT resource constraints to prepare for the 2026 tax season. This may involve hiring additional employees and prioritizing critical updates to processing systems. The agency's management has projected the need to hire approximately 3,500 new employees to achieve an 85% level of service on its toll-free telephone service. Additionally, the IRS will need to manage its Accounts Management adjustments inventory, which is expected to grow significantly. Stakeholders, including taxpayers and policymakers, will be closely monitoring the IRS's efforts to address these challenges.
