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By Hugh Cameron
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The Internal Revenue Service kept refunds largely on schedule this year, surprising observers and watchdogs after major staff reductions and operational shifts, but experts warn that significant issues lie ahead for U.S. taxpayers.
Last June, the National Taxpayer Advocate—responsible for identifying systemic issues at the agency—predicted that staffing cuts adopted since the return of Donald Trump to the White House would lead to challenges during the 2026 filing season.
"With the IRS workforce reduced by 26 percent and significant tax law changes on the horizon, there are risks to next year’s filing season," said Erin M. Collins. "It is critical that the IRS begin to take steps now to prepare."
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But this week, Collins said that earlier "considerable uncertainty" had been somewhat put to rest, and remarked in her mid-year report to Congress that the IRS "performed better than expected in most respects."
"The vast majority of taxpayers filed their returns successfully and received their refunds without significant delay," she wrote. "IRS leadership and its workforce deserve substantial credit for that accomplishment, particularly given the extraordinary operational pressures they overcame."
When approached for comment, the IRS noted the successes highlighted by the National Taxpayer Advocate.
"Nearly half of all filers claimed a tax deduction from the Working Families Tax Cuts, allowing millions of Americans to keep more of their hard-earned money," it said in a statement to Newsweek.
"Throughout the filing season, the IRS provided improved customer service by deploying resources to help taxpayers whether online, over the telephone, by mail, or in person."
How the IRS Has Handled ‘Extraordinary Operational Pressures’ in 2026
As Collins acknowledged in her report, the agency overcame "significant challenges" to process 138.6 million returns and issue 90.4 million refunds this year, both of which marked increases compared to 2025.
These included adapting to President Trump’s signature tax bill—the One Big Beautiful Bill Act—which was filled with retroactive provisions and new deductions, led to outsized tax refunds, and resulted in "more than 100 changes to the tax code."
However, chief among these challenges were sweeping organizational cuts. Collins said the total IRS workforce had dropped by around 28,000 (or 27 percent) since last filing season, which translated to "longer waits for assistance, fewer experienced employees available to work on complex account issues, delayed responses to correspondence and, as a result, longer case resolution times."
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According to the watchdog Civil Service Strong, the IRS also opted against a seasonal hiring push, as is typical to support the filing season rush.
Collins nevertheless described it as "largely successful," thanks in part to its "digital-first" shift, which involved more returns via automation and pushed more taxpayers online—98 percent of returns were submitted electronically this year.
"As a result, the significant majority of returns were processed solely by automation and without issue, and most taxpayers who filed those returns generally had a smooth, seamless experience," she wrote in her report.
"As IRS Chief Executive Officer Frank J. Bisignano has often said, the IRS will meet taxpayers where they want to be served," the agency told Newsweek.
"While transforming into a digital-first agency, the IRS will remain available to assist taxpayers in the manner they want to be served—online, on the phone, or in person at Taxpayer Assistance Centers."
"The Service’s success during the filing season can be attributed to the agency’s dedicated workforce and technology deployment, which worked to serve the American public better," the IRS added.
Enduring Issues and Problems on the Horizon
But Collins’ report highlights a number of persistent—and in some cases worsening—problems at the agency, including the fact that "taxpayers who required assistance from the IRS often struggled to get it."
The IRS received 48.1 million calls during the 2026 filing season, with an average time waiting on hold of 14 minutes. This compares to 50.2 million calls and a wait time of only eight minutes in 2025.
"The good news is it didn’t crash because of all the tax law changes," said former National Taxpayer Advocate Nina Olson, who served in the role from 2001 to 2019. "The bad news is, the workforce cuts really impacted taxpayers trying to get information from the IRS, have their correspondence handled and addressed, their identity theft cases resolved etc."
Olson, now executive director of the Center for Taxpayer Rights, told Newsweek that beyond the headline of the agency managing through this year's unique operational challenges, the report contains "a lot of damning data" on its ability to address taxpayer concerns.
She pointed Newsweek to a section showing that the backlog of unprocessed amended returns and taxpayer correspondence—"where taxpayers are trying to resolve issues with the IRS"—had grown to 7 million from only 3.8 million over the past year, an increase of 84 percent.
And the political adviser and consultant Sarah Christopherson, former policy director at Americans for Tax Fairness, likewise questioned "the premise that it's been a success," based on her own experience attempting to file.
"The IRS.gov/connect system wasn't working correctly for me. The call volume at both the customer service number and the taxpayer assistance appointment line was so high that both numbers simply hung up on me across multiple days and attempts," she told Newsweek. "Even discounting that this is just one taxpayer's experience (my own), if the call volume across multiple IRS numbers is so high that callers aren't even put into a queue but are told to ‘call the next day’ and then promptly hung up on, that suggests a complete collapse of IRS's ability to manage operations."
This is in addition to long-running issues, such as the fact that victims of identity theft are waiting over 600 days on average for a resolution, with over 500,000 Identity Theft Victim Assistance (IDTVA) cases still open.
And experts question whether digitization can fully offset the loss of staff and institutional expertise at the agency in 2027 and beyond.
"This filing season demonstrated that the IRS can process tax returns and issue refunds efficiently even after significant workforce reductions," said Tom O’Saben, director for Tax Content & Government Relations at the National Association of Tax Professionals. "But it's important to distinguish between routine return processing and the agency's broader mission."
O’Saben told Newsweek that while workforce reductions "may not immediately affect the processing of standard returns," these already appear to be having an impact on functions—like identity theft and appeals—that "rely heavily on experienced personnel."
"Digital tools should complement and not replace the expertise of IRS personnel," he added. "Many taxpayers and practitioners still require access to knowledgeable employees, particularly when dealing with complex tax matters, audits, or compliance issues."
Contact Newsweek editors on this story: Ben Kelly and Gray R. Thomas
Update 6/26/26 6:39 a.m. ET: This article was updated with a response from the IRS.
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