The Internal Revenue Service is entering the 2026 tax season with its smallest workforce in years, raising the specter of delayed refunds, longer wait times, and a strained ability to help taxpayers. A perfect storm of deep staffing cuts, a massive backlog of amended returns, and lowered customer‑service targets has left the agency scrambling to reassign back‑office employees just as filing season kicks into high gear. For millions of Americans counting on timely refunds, the situation means filing early, double‑checking every detail, and preparing for a potentially rocky ride through the tax system.
The Great IRS Staffing Crisis: What's Happening Behind the Scenes
According to the National Taxpayer Advocate’s annual report to Congress, the IRS lost roughly 27% of its workforce between January and December 2025—dropping from over 102,000 employees to about 74,000. That reduction, described as “the most dramatic downsizing in recent memory,” comes just as the agency must process an expected 164 million individual tax returns for the 2025 tax year. The report, cited by multiple news outlets including Business Insider and Forbes, warns that the combination of staffing cuts and significant retroactive changes in tax law creates “a markedly different landscape” for the 2026 filing season.
Compounding the problem is a backlog of nearly 590,000 amended tax returns, a figure that is about 20,000 higher than a year ago and roughly four times larger than pre‑pandemic levels. The Independent and Hindustan Times both note that this inventory, if not worked during the current processing year, will carry into the 2026 filing season and could further slow routine refunds. In response, the IRS has begun placing back‑office employees on “involuntary details” to handle frontline filing‑season work, a move first reported by Federal News Network. Most of these temporary reassignments are slated to last through late June, indicating that the agency expects staffing pressures to persist deep into the summer.
Timeline: How the IRS Reached This Breaking Point
The current crisis didn’t emerge overnight. It’s the result of a series of events that began in early 2025. In January 2025, the IRS still employed more than 102,000 people, but a combination of attrition, layoffs, and a government shutdown in the fall of that year sharply reduced its ranks. By December 2025, the workforce had fallen to about 74,000—a loss of nearly 30,000 employees in just 12 months. During the same period, the backlog of amended returns grew by about 20,000, reaching the current 590,000 mark.
In late January 2026, the National Taxpayer Advocate delivered its annual report to Congress, flagging the staffing shortfall as a major risk to the upcoming filing season. Days later, the IRS confirmed it was moving back‑office staff to frontline roles on an involuntary basis. At the same time, the agency publicly lowered its telephone service level (LOS) goal from 85% to 70%, meaning it expects to answer only seven out of ten calls—a decision highlighted by Forbes and Federal News Network. With tax season officially underway, the IRS now faces the dual challenge of processing a huge volume of returns while training new hires, a process that can take 60‑80 days according to Fortune.
Analysis: What This Means for Your Tax Refund and Financial Planning
For individual taxpayers, the immediate concern is refund timing. The IRS typically issues refunds within 21 days for electronically filed returns with direct deposit, but this year that timeline could stretch to eight weeks or longer for many filers. As Investopedia notes, the best way to avoid delays is to file electronically, choose direct deposit, and ensure your return is error‑free. Any mistake—even a mismatched name or Social Security number—could trigger manual review, adding weeks to the process.
Financial advisors are urging clients to adjust their expectations and cash‑flow planning accordingly. “If you’re counting on a refund to pay down debt or cover a major expense, you need to build in a buffer of at least a month,” says one planner quoted in The Washington Post. The lowered telephone service goal also means taxpayers who run into problems may have a harder time reaching a live agent. Wait times, already lengthy in recent years, are likely to increase further.
From an investment perspective, the IRS crunch underscores the importance of proactive tax planning. Investors who normally wait until April to file might consider submitting their returns as soon as they have all necessary documents. Additionally, those who need to amend prior‑year returns should be prepared for extended processing times—possibly stretching into the fall.
Current Status: Where the IRS Stands Today
As of early February 2026, the IRS has officially opened the filing season and begun accepting returns. The agency says it has reassigned “hundreds” of back‑office employees to processing and customer‑service roles, and it continues to hire seasonal workers, albeit at a slower pace than originally planned. The National Taxpayer Advocate’s office, however, remains skeptical that these measures will be enough to offset the loss of nearly 30,000 full‑time staff.
In a recent statement, the IRS emphasized that it is “committed to providing the best possible service under the circumstances” and pointed to its expanded digital tools, such as the Tax Pro Account for tax professionals, as a way to reduce pressure on phone lines. Nevertheless, the agency’s own projections show that it will likely fall short of its historical service levels, and watchdog groups are already monitoring for signs of breakdowns.
What Happens Next: Predictions for the 2026 Tax Season
Experts predict a filing season characterized by two‑tier service: taxpayers with simple, error‑free returns may see little difference, while those with complex situations or needing assistance could face significant delays. The IRS’s decision to lower its phone‑service target is a clear signal that it expects call volumes to overwhelm its reduced staff. Axios reports that the agency entered the season “short‑staffed, raising the risk of refund delays and longer waits for help.”
Looking ahead, the staffing shortage could also affect the IRS’s ability to conduct audits and enforce compliance. With fewer employees available to examine returns, some analysts suggest that audit rates may drop, at least temporarily. However, the agency is likely to prioritize high‑income and corporate returns where the potential revenue recovery is greatest.
The Bottom Line: Key Takeaways for Taxpayers
• File early and electronically. The sooner your return is in the system, the sooner it can be processed.
• Choose direct deposit for your refund. It’s the fastest, safest way to receive your money.
• Double‑check every entry on your return. Errors are the leading cause of refund delays.
• Be patient with customer service. Wait times will be longer, and the IRS is answering fewer calls.
• If you need to amend a return, expect a long wait—possibly months—for processing.
• Consult a tax professional if your situation is complex; they can help you navigate the system and avoid costly mistakes.
While the IRS is taking steps to mitigate the staffing crisis, the 2026 tax season will test the agency’s resilience. For taxpayers, the message is clear: plan ahead, be meticulous, and prepare for a slower-than-usual refund cycle.
