Increased complications anticipated in tax filing for the upcoming year due to IRS reducing its workforce by 25% according to the agency's oversight body.
The Internal Revenue Service (IRS) faces potential challenges during the 2026 tax filing season due to significant staffing cuts under the Trump administration. The IRS workforce has decreased by about 25% since early 2025, with the total number of employees falling from approximately 103,000 to around 77,400[1][2].
Key Impacts
Reduced Audit Capacity
Over 30% of revenue agents, who conduct audits, have separated, potentially weakening IRS enforcement and compliance oversight[3].
Decreased Taxpayer Assistance
The Taxpayer Services division, responsible for phone support and help with filing, has been reduced by over 20%, leading to fewer resources for answering taxpayer questions and resolving filing issues[4].
Small Business Impact
The Small Business/Self-Employed division lost 35.5% of its workforce, affecting millions of small businesses and sole proprietors who rely on these services for accurate tax processing and guidance[4].
IT Strain
The IRS IT workforce declined by about 25%, increasing risks for delays in processing returns, system outages, or slower deployment of new tax software updates[2].
Potential Processing Delays
With fewer tax examiners to review returns, processing times and error resolution may slow, increasing the likelihood of delays in refunds and tax account corrections[1].
Concerns and Warnings
The National Taxpayer Advocate Erin Collins has warned that taxpayers may face challenges during the 2026 filing season due to these staffing cuts[2]. The IRS is also dealing with cases of potential identity theft "at a glacial pace," with an average of 20 months to resolve these cases[5].
The Yale Budget Lab projects that staffing cuts of this magnitude would result in the IRS collecting $159 billion less in revenue over the next 10 years[6]. To "maintain" its current level of phone service to taxpayers, the IRS needs to hire more than 11,000 call center representatives[7].
Former National Taxpayer Advocate Nina Olson has stated that these staffing cuts will hurt workforce morale and make it harder for taxpayers to get help from the agency[8].
Modernization Efforts
Despite these challenges, the IRS plans to roll out artificial intelligence tools at call centers and digitize more of its paper-based processes as part of a modernization plan[9]. Former IRS Commissioner Danny Werfel has mapped out a strategic operating plan showing how the IRS would use billions of dollars in the Inflation Reduction Act to get long-delayed IT modernization projects back on track[10].
However, these modernization efforts may be hindered by the staffing cuts, as the IRS's fiscal 2026 budget request proposes a nearly 60% cut to IRS technology and operations support staffing, and a nearly 40% cut to its spending[11].
References
[1] IRS Workforce Reduction: Impact on 2026 Tax Filing Season [2] National Taxpayer Advocate 2025 Annual Report to Congress [3] IRS Revenue Agent Workforce Decline [4] Impact of IRS Staffing Cuts on Small Businesses [5] IRS Identity Theft Resolution Times [6] Yale Budget Lab Staffing Cuts Impact on IRS Revenue [7] IRS Call Center Staffing Needs [8] Former National Taxpayer Advocate on IRS Staffing Cuts [9] IRS IT Modernization Plan [10] Werfel's IT Modernization Plan for IRS [11] IRS FY 2026 Budget Request
- The potential staffing cuts within the federal workforce of the Internal Revenue Service (IRS) could necessitate a workforce reimagined, considering the magnitude of the reductions and their implications on various areas, such as finance, business, politics, and general-news.
- The federal budget reconciliation process may be impacted due to the reduced capacity of the IRS, especially in terms of revenue collection, as projected by the Yale Budget Lab, which estimates a loss of $159 billion in revenue over the next 10 years.
- As a result of the decreased IRS workforce, there might be increased scrutiny from the general public and political circles on the effectiveness and efficiency of the agency's functioning, given the potential for delays, increased errors, and compromised taxpayer assistance.
