IRS faces stiff challenges in 2026 tax season due to workforce cuts and new laws, a watchdog says

WASHINGTON (AP) — The national taxpayer advocate is cautioning that the 2026 tax filing season is likely to present challenges for taxpayers who encounter problems with filing their taxes given the exodus of IRS workers since the start of the Trump administration.

National Taxpayer Advocate Erin M. Collins released her annual report to Congress on Wednesday, two days after the start of the 2026 season. She finds that while the IRS was able to process returns in 2025 without major disruptions, “entering 2026, the landscape is markedly different.”

“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 Republicans’ tax and spending measure that President Donald Trump signed into law last summer, Collins said in her report.

Collins says most taxpayers should be able to file their returns and receive their refunds without delay, but she notes “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.”

The tax filing season began on Monday, and agency leaders, including Treasury Secretary Scott Bessent and IRS CEO Frank Bisignano, have said they expect a smooth season.

Bisignano last week announced new priorities and a reorganization of IRS executive leadership in a letter addressed to the agency’s 74,000 employees, saying 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.”

Bessent as well as others in Trump’s second administration have also promised American taxpayers “substantial tax refunds,” as part of the Republican administration’s solution to an ongoing affordability crisis.

Still, other IRS watchdogs have outlined major concerns at the start of the 2026 tax season.

Diana M. Tengesdal, deputy inspector general for audit at the Treasury Inspector General for Tax Administration, wrote a letter to IRS leadership on Monday and pointed to IRS staffing at October 2021 levels, combined with thousands of unprocessed tax returns and taxpayer correspondence.

The IRS started 2025 with about 102,000 employees and finished with about 74,000 after a series of firings and layoffs brought on by the Department of Government Efficiency. While last year IRS employees involved in the 2025 tax season were not allowed to accept a buyout offer from the Trump administration until after the taxpayer filing deadline, this year many of those customer service workers have left.

Tengesdal’s office says despite new efforts to modernize tax administration, “initiatives to offset staffing losses may not yield expected benefits during the 2026 Filing Season.”

More than 165 million individual income tax returns were processed in 2025, with 94% submitted electronically. The average refund was $3,167.

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