As approximately 164 million Americans gather their financial documents for the tax filing season, a critical warning from the Treasury Inspector General for Tax Administration (TIGTA) suggests the period could be fraught with unprecedented challenges and frustrations. The independent oversight body has outlined a perfect storm of converging crises within the Internal Revenue Service, raising serious alarms among tax professionals and government officials alike. A combination of massive processing backlogs, critical staffing shortages, bureaucratic hiring paralysis, and delayed technological upgrades has created a high-risk environment. This precarious situation threatens to cause significant delays in tax return processing, the issuance of vital refunds, and a general collapse of taxpayer service, painting a grim picture for an agency already under immense pressure. The 2026 season, which is just beginning to accept 2025 tax year returns, is commencing under a cloud of operational strain that could impact households across the nation.
A Confluence of Crises
At the very foundation of the IRS’s operational challenges is a staggering and persistent inventory of unprocessed items that has ballooned to critical levels. As of December 2025, the agency reported a backlog of approximately two million individual tax return items, a figure that represents a monumental 129% increase compared to pre-pandemic years. This mountain of unresolved work includes over half a million amended returns and nearly 300,000 paper-filed returns, alongside a vast array of taxpayer correspondence, system-rejected filings, and unpostable transactions. The primary drivers of this backlog are the lingering effects of multi-year operational disruptions, including the COVID-19 pandemic and a recent, debilitating federal government shutdown that lasted from October 1 to November 13, 2025. TIGTA explicitly warns that this existing inventory presents a substantial risk to the current filing season, as it will inevitably divert resources and create a bottleneck that slows down the processing of new 2025 returns. This domino effect not only delays refunds for taxpayers but also carries a direct financial consequence for the government, which is liable for interest payments on late refunds—a cost that has already amounted to billions of dollars in recent years.
The immense inventory crisis is dangerously compounded by a severe and ongoing decline in the agency’s workforce, leaving it ill-equipped to manage both its existing backlog and the incoming flood of new returns. By October 2025, overall IRS staffing levels had plummeted by a staggering 19%, equivalent to a loss of about 19,000 employees. This sharp reduction is attributed to a combination of budget cuts mandated by the Department of Government Efficiency (DOGE) and congressional clawbacks of Inflation Reduction Act (IRA) funding, which had been specifically allocated to modernize the agency and bolster its ranks. Consequently, staffing in functions essential to the filing season has regressed to 2021 levels, effectively wiping out any progress made in recent years. The Submission Processing department, which is responsible for handling returns and resolving errors, has been hit particularly hard, operating with over 1,600 fewer employees than it had in October 2021. Even when the IRS received approval to hire 2,200 new employees for the 2026 season, the process was a near-total failure due to bureaucratic red tape. As of late December 2025, only 50 of those positions had been filled—a hiring rate of just 2%—ensuring that the agency will enter its busiest period critically understaffed.
The Eroding Taxpayer Experience
The direct consequence of these deep-seated internal struggles is a predictable and significant degradation in the quality of service that taxpayers can expect to receive. In a formal acknowledgment of its diminished capacity, the IRS has officially lowered its telephone level of service (LOS) goal for the 2026 season to 70%. This is a sharp reduction from the 85% target of recent years and represents a standard the agency has failed to meet since 2022. The new goal stands in stark contrast to the highly successful 2024 filing season, where an influx of IRA-funded telephone assistors resulted in an 85% LOS and average wait times of under five minutes. For the current season, taxpayers who rely on phone support should brace for long wait times, frequent busy signals, and immense difficulty in reaching a knowledgeable representative. This service decline is not limited to phone lines; new employees in the Accounts Management division received a modified and shortened training curriculum, leaving many equipped only to handle basic inquiries like call routing rather than resolving complex taxpayer account issues. The IRS plans to rely heavily on overtime to manage service demands, a costly and unsustainable strategy that heightens the risk of employee burnout and further service degradation.
Further eroding the support network for taxpayers is the dual failure of in-person assistance and technological modernization. All 362 Taxpayer Assistance Centers (TACs) were shuttered during the 2025 government shutdown, and while most have reopened, their operational capacity remains inconsistent and unreliable. By December 2025, 35 TAC offices were still temporarily closed or unstaffed, a notable increase from earlier in the year, effectively reducing access to crucial face-to-face service for those who need it most. Simultaneously, the modernization initiatives that were intended to offset staffing shortages and improve efficiency are not progressing quickly enough to provide any meaningful relief. The agency’s IT workforce has declined by approximately 16%, severely limiting its ability to develop, test, and deploy critical system updates. Key projects have stalled; the “Zero Paper Initiative,” designed to digitize paper-filed returns, has only scanned about 4% of its target volume. Similarly, tools meant to automate the processing of amended returns are still being rolled out and will not be fully operational, while the ambitious AI-enabled “Taxpayer 360” case-management system has encountered technical problems, pushing its full deployment well past the conclusion of the 2026 filing season.
A Precarious Outlook
The synthesis of TIGTA’s report ultimately presented a cohesive and alarming narrative. The evidence indicated that the Internal Revenue Service entered the 2026 tax filing season in a profoundly weakened state, facing elevated operational risks across multiple, interconnected fronts. The confluence of massive inventory backlogs, severely depleted staffing levels, dysfunctional hiring mechanisms, and delayed technology rollouts had created a high probability of a difficult and frustrating experience for millions of American taxpayers. The core findings suggested that citizens should have braced for slower return processing, delayed refunds, and greatly diminished access to both telephone and in-person support from the agency. While the IRS had acknowledged these challenges and developed mitigation plans, TIGTA’s overarching conclusion was that these efforts were unlikely to materialize in time to materially improve the taxpayer experience during this critical period, leaving the nation’s tax administration system in a vulnerable position.
