IRS workforce cuts, new tax laws could lead to delays for some filers

You may have to wait a bit longer for your tax refund, following last year's aggressive staffing cuts to government agencies like the IRS by the onetime Elon Musk-led Department of Government Efficiency.

The National Taxpayer Advocate and the Treasury Inspector General for Tax Administration warned in separate reports last month that the IRS may have difficulty maintaining its service levels this tax season.

"The agency began the [last] year with its largest workforce in recent memory, and then after absorbing a 27% reduction, it ended the year with one of its smallest," National Taxpayer Advocate Erin Collins stated in her annual report to Congress. "Reductions of this magnitude almost surely will affect operations, particularly in areas that already depend heavily on manual work and experienced employees, such as processing correspondence, amended returns, and other account adjustments, including identity theft cases."

Collins' report said the agency employed more than 102,000 people in January 2025, and by December, that number was 74,000.

“It’s certainly the case that the IRS has started the 2026 tax season with fewer resources than it had last year,” said John Ricco, associate director of policy analysis at the Budget Lab at Yale University. "Time will tell about delays on returns as we get into March and April.”

The IRS processed about 138 million individual tax returns last year, according to the National Taxpayer Advocate.

Experts said the largest impact to filers will be getting help from the IRS at a time when there have been extensive and complex changes to the tax code, mostly in the form of new deductions for some people. It’s created a “perfect storm,” according to Rebecca Wohltman, tax attorney at Sandberg Phoenix in O'Fallon, Illinois.

“Getting answers and resolution right now is just like pulling teeth,” Wohltman said. “I think a lot of the problem is that a lot of people who opted to retire last year [when DOGE was making cuts] had the experience and knowledge. They knew how to get information and work through the system to get resolution.”

Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center in Washington, D.C., said efforts by the IRS to recruit more employees for this tax season may not provide much help to filers.

“If you hire new people, you need experienced people to train the new hires,” Holtzblatt said. “When you have the departure of the experienced people, you lose the teachers of the new hires.”

Wohltman, who has been a tax attorney for 11 years, said this year she has reached out to the IRS Taxpayer Advocate Service more than ever in her career.

“That hasn’t helped because they are so overloaded with cases, and they’ve experienced staff cuts as well,” she said.

Frank Costabile, certified public accountant and president of Costabile & Steffens in northwest suburban Rolling Meadows, has experienced several delays recently when trying to reach the IRS with questions about a client’s issues.

“It’s definitely been harder to reach them,” Costabile said. “Not only do you have to wait to get through, but when you do, they can’t help you because their systems go down. It’s happened three times in the last 30 days that I’ve called, and I know my employees are in a similar situation. It’s so frustrating.”

Most experts said simple returns filed electronically shouldn't experience processing delays. But filers who have issues or file by mail may see a delay.

“There are taxpayers who still file their returns on paper, and those take a much longer time to process,” Holtzblatt said.

While only about 6% of taxpayers file paper returns, she said the figure is significant enough to create a delay.

“That’s still several million people,” Holtzblatt said. She said some file paper returns because they're "late adapters of technology," concerned about online security, or they don't have access to a computer.

Holtzblatt also said she anticipates the IRS will take longer to process the returns of anyone who gets flagged because of questions.

“For example, the IRS may ask a taxpayer for more information about a child who they are claiming as a dependent. The taxpayer then provides it, but it takes more time because a human has to review it, and if they have less employees, it will take more time,” she said.

Another change this year that can potentially cause delays is the requirement of a new federal tax form called Schedule 1-A, which must be completed when filing 2025 federal income tax returns to claim the new deductions from President Donald Trump's budget bill.

Most experts advise filing electronically as early as possible.

“Make sure your returns are accurate, because if there’s an error and you have to correct it, you’re going to be waiting a long time,” Wohltman said. “And if you’re in a situation where you’re dealing with a problem like a correction or a notice the IRS sent you, you have to be patient. There is no way to expedite the process.”