IRS Watchdog Issues Urgent Alert: Brace for Tax Filing Challenges Ahead as Workforce Slashed by 25%

A recent report from the National Taxpayer Advocate, Erin Collins, highlights potential challenges for taxpayers in the upcoming filing season. She pointed out that the IRS has lost over a quarter of its staff since the Trump administration, particularly in IT and enforcement roles.

This year’s filing season went relatively smoothly, thanks to the IRS’s substantial workforce and extensive preparations. However, Collins warns that the 2026 filing season could see delays and inefficiencies. The IRS workforce has dropped from about 102,000 to below 76,000 employees. This loss includes many seasoned professionals, potentially eroding taxpayer services.

Former IRS Commissioner Danny Werfel noted that stronger customer service metrics were achieved due to a hiring boost during his tenure. In a briefing, he expressed concern about aggressive cuts to IRS staffing, particularly with plans for increased automation. While new technologies may enhance operations, cutting employees at the same time could create difficulties for taxpayers who still rely on personalized assistance.

The IRS is also preparing for possible significant changes to the tax code that Congress may approve. These changes might complicate the filing process for millions of taxpayers, making the next filing season even more challenging. With the workforce reduction and potential tax law changes, Collins highlights the need for the IRS to take action now to ensure a smoother process next year.

Treasury Secretary Scott Bessent suggested that an “AI boom” could help the IRS manage its workload despite the staffing decrease. However, former IRS Commissioner John Koskinen warns that it won’t be enough to overcome the challenges posed by losing a significant number of staff, especially in IT. He voiced concerns about declining taxpayer trust if the agency fails to provide adequate services.

Statistics reveal that around 4,000 employees accepted the first deferred resignation offer, with 23,000 applying for a second option. Only 18,000 were accepted. Such losses can hinder the agency’s capabilities and decrease morale. Former National Taxpayer Advocate, Nina Olson, echoed this sentiment, underscoring how these cuts can affect taxpayers’ ability to get timely help.

The IRS is also facing drastic budget cuts. The 2026 budget proposal aims to reduce funding from over $22 billion to about $14 billion. Experts predict that these cuts could lead to a significant decline in tax revenue, with an estimated loss of $159 billion over the next decade, according to the Yale Budget Lab.

With preparations for the 2026 filing season underway, Collins warns against repeating past mistakes—in particular, the 1985 filing season, which was marred by rushed technology upgrades and widespread service failures. She emphasizes the urgency of hiring qualified staff and improving technology to avoid future problems for taxpayers.

The IRS plans to recruit over 11,000 call center representatives to maintain decent service levels. Without adequate funding, the IRS estimates it will only be able to answer a fraction of incoming calls next tax season. Currently, while about 87% of calls are answered, that number may drop to just 16% next year.

On top of these staffing issues, the IRS is grappling with cases of potential identity theft, which can take an alarming 20 months to resolve. This delay places a burden on taxpayers, especially those with lower incomes who depend on tax refunds for daily expenses.

As the IRS navigates these challenges, it’s vital for the agency to adapt to ensure that taxpayers receive the services they need. The upcoming filing season’s success depends on strategic planning, adequate staffing, and the timely implementation of technology improvements.

For more detailed insights, you can refer to the full report by the National Taxpayer Advocate here.

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