IRS Staffing Crisis Threatens to Delay 2026 Tax Refunds

2026-02-06 politics

Washington, Friday, 6 February 2026.
A watchdog warns of significant refund delays as the IRS enters the 2026 season with a 2 million case backlog and only 2% of necessary processing staff hired.

A Staggering Personnel Deficit

The scale of the staffing shortfall facing the Internal Revenue Service (IRS) for the 2026 filing season is numerically stark. As of late December 2025, the agency had onboarded only about 50 new submission processing employees—a mere 2% of the 2,200 authorized hires intended to manage the influx of returns [1][3]. This hiring lag exacerbates a broader exodus of talent; data indicates the IRS workforce contracted significantly over the last year, plummeting from over 102,000 employees to approximately 74,000 by December 2025, a loss of 28000 personnel [8]. Consequently, the agency began the filing season, which officially opened on January 26, 2026, with a backlog of approximately 2 million unresolved cases—a figure that has more than doubled since pre-pandemic levels [1][8].

Operational Strain and Emergency Measures

To mitigate the crisis, IRS leadership has resorted to reassigning seasoned employees from departments such as human resources and IT to handle entry-level processing and phone duties, despite many lacking direct tax experience [3][7]. The strain is evident in the agency’s revised performance metrics; the IRS has officially lowered its telephone service goal to 70% for this filing season, a sharp decline from the 85% target set the previous year [1][8]. While Treasury Secretary Scott Bessent, serving under the administration of President Donald Trump, stated on February 4, 2026, that the department is pivoting toward artificial intelligence to bolster customer service capabilities, watchdogs warn that these automation upgrades will not be fully operational until after the current filing season concludes [1].

Political Headwinds and Legal Complications

The operational challenges are compounded by a contentious political landscape and fiscal constraints. National Taxpayer Advocate Erin M. Collins notes that the IRS is navigating a workforce reduction of approximately 27% while simultaneously implementing complex tax law changes mandated by the Republican tax and spending measure signed into law by President Trump in the summer of 2025 [5]. Furthermore, the agency faces extraordinary legal pressure from the Executive Branch itself. On January 29, 2026, President Trump and his family filed a lawsuit seeking $10 billion in damages against the IRS and the Treasury Department, alleging negligence regarding the unauthorized disclosure of tax records by a former contractor [5]. Additionally, a proposed budget deal includes a $1.1 billion reduction to the IRS’s base budget compared to FY 2025, further tightening the agency’s resources [5].

Implications for Taxpayers and the Economy

For the estimated 164 million individual returns expected by the April 15 deadline, the friction within the agency suggests inevitable delays, particularly for returns requiring manual review [2]. While Treasury Secretary Bessent and IRS CEO Frank Bisignano have publicly expressed expectations for a smooth season, independent analysts caution that the backlog and lack of experienced staff increase the risk of delayed refunds for complex cases [1][8]. This potential bottleneck poses a risk to consumer spending patterns, as delays in processing could stall the injection of refund liquidity into the economy [1][7].

Sources

IRS tax administration