IRS enters 2026 tax season with 27% fewer workers and 2M+ unresolved cases. Watchdogs warn refund delays and phone service failures are likely this year.
For millions of Americans who sit down each year to file their taxes, the process often feels like a test of patience. This year, federal watchdogs are warning it could feel like something worse. Two of the government’s most authoritative oversight bodies have raised serious concerns about whether the Internal Revenue Service is ready to handle the demands of the 2026 filing season, and the picture they paint is not a reassuring one.
National Taxpayer Advocate Erin Collins released her annual report to Congress on January 28, 2026, two days after the filing season officially opened. In it, she delivered a frank assessment: while 2025 was largely a smooth year for the IRS, 2026 is a different story entirely.
“Among the reasons the 2025 filing season went well was that the IRS had its largest workforce in many years and faced no major tax law changes. Entering 2026, the landscape is markedly different.”
At the same time, the Treasury Inspector General for Tax Administration, known as TIGTA, sent a separate memo to IRS leadership outlining a parallel set of concerns: growing backlogs, missed hiring targets, and technology modernization projects that are not moving fast enough to help during this season’s crunch.
From 102,000 workers to 74,000 in a single year
The numbers behind the workforce decline are striking. At the start of 2025, the IRS employed roughly 102,000 people. By December of that year, that number had fallen to approximately 74,000, a reduction of nearly 28,000 employees, or about 27 percent of the total workforce. The losses were driven by a combination of firings, layoffs, and voluntary departures encouraged by the Department of Government Efficiency’s deferred resignation program.
What makes the reduction especially concerning, according to Collins, is not just the raw number of people who left, but who they were. Many were seasoned professionals with deep institutional knowledge, trained in complex tax law, processing systems, and customer service protocols that take years to develop.
“Many departing employees were experienced workers whose institutional knowledge and technical expertise cannot easily be replaced.”
The IRS attempted to backfill some of the gaps late in 2025, including receiving permission in August to hire around 3,500 employees for the Accounts Management function. But that approval came roughly four months later than the equivalent hiring window for the previous filing season, and TIGTA noted those new hires carry significantly less experience than the workers they replaced. New customer service representatives typically require 60 to 80 days of training before they can handle complex taxpayer cases independently.
A backlog that doubled in one year
Even before the 2026 filing season officially began, the IRS was already carrying a heavy load of unfinished work. TIGTA’s memo pointed to more than 2 million unresolved cases sitting in the agency’s inventory as of December 2025, a figure that is more than double pre-pandemic levels and about half a million higher than just one year earlier.
The spike in paper return backlogs is particularly telling. In December 2024, the IRS had about 52,293 paper tax returns waiting to be processed. One year later, after the staffing cuts took hold, that number had jumped to 294,052, a more than fivefold increase. TIGTA warned those unresolved inventories will carry directly into the active filing season, raising the likelihood of refund delays.
Phone lines under pressure
Anyone who has ever tried to reach the IRS by phone knows it can already be a frustrating experience. This year, it may be harder than ever. The agency handles more than 100 million phone calls annually, but the number of customer service representatives answering those calls shrank by 22 percent in 2025.
In response, the IRS quietly lowered its phone service level goal from 85 percent to 70 percent for the 2026 filing season. The last time the IRS operated at a 70 percent service level was 2022, when the agency was still recovering from the pandemic. In that year’s worst stretches, representatives answered fewer than one in five incoming calls.
The IRS has said it plans to rely more heavily on overtime to compensate, and Treasury Secretary Scott Bessent has pointed to artificial intelligence as a tool that will eventually ease pressure on call centers. But TIGTA cautioned that those technology upgrades are not yet ready and will not be fully operational in time to help taxpayers this season.
New tax law adds another layer of complexity
On top of the staffing challenges, the IRS is simultaneously implementing more than 100 changes to the tax code under the One Big Beautiful Bill Act, the sweeping legislation President Trump signed into law last summer. Many of those changes apply retroactively to the 2025 tax year, meaning the IRS had to update dozens of tax forms, rewrite programming systems, and develop new guidance for taxpayers, all while running with a fraction of its usual workforce.
Collins described the situation as a “perfect storm”: workforce cuts, leadership turnover, and complex new law changes all arriving at once. As of mid-November, more than half of the 28 positions the IRS considers top leadership roles were either vacant or filled by acting officials. The agency has been without a permanent commissioner for an extended stretch. These leadership gaps, Collins wrote, inevitably affect the agency’s ability to plan and execute during the most demanding time of year.
Who will feel it most
Collins was careful to distinguish between two groups of taxpayers. For those who file electronically, submit error-free returns, and set up direct deposit for their refunds, the experience should be routine. That pathway remains the most reliable way to avoid delays, and it covers the majority of American filers.
But for the millions of Americans who hit a snag, whether it is a mismatch on their W-2, an identity theft flag, a complicated deduction, a paper return, or simply a question they need answered over the phone, the 2026 season carries real risk of frustration and delay. Low-income households that depend on tax credits for essential living expenses are among the most vulnerable, as any refund delay can mean missed rent payments, skipped bills, or difficult choices.
“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.”
What the IRS says
IRS Chief Executive Officer Frank Bisignano struck a more confident tone in a statement released in early January, saying the agency is ready to help taxpayers meet their filing and payment obligations. Treasury Secretary Bessent has echoed that message, pointing to AI tools and automation as part of a modernization push that he says will eventually improve service delivery. The administration has also promised taxpayers larger refunds this year under the new tax law, a politically significant pledge with midterm elections approaching.
Congress has received competing signals on funding. The Trump administration proposed more than $850 million to help the IRS hire additional call center representatives and roll out new automation tools. The House Appropriations Committee, however, advanced a spending bill that excluded those funds and included deeper IRS budget cuts than what the administration had requested.