The Internal Revenue Service needed about a month to process individual tax returns this past filing season, double the amount last year, due to staffing shortages and unavailable processing systems, according to a new report.
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The IRS received approximately 3 million fewer calls than last year (about 28 million), but more calls were answered by automation (41%) compared to last year (34%). With fewer staff members available during the 2026 filing season and the IRS's efforts to balance workload on phones and correspondence, customer service representatives answered about 2 million fewer telephone calls compared to last year.
In response, more taxpayers used online self-service options as the IRS reduced access to live assistance. For example, as call wait times doubled, more taxpayers logged in to IRS's individual online accounts (154.6 million logins) than they had in the past six years.
The GAO report also found the IRS delayed refunds for millions of taxpayers who did not provide direct deposit information because of a
IRS officials told the GAO they sent about 4.2 million notices to taxpayers as of early May 2026 telling them they had 30 days to provide a new or updated bank account number to receive their refund via direct deposit, or otherwise, the IRS would issue them a paper check refund after six weeks. As a result, the IRS delayed millions of taxpayer refunds. By early April, the number of paper check refunds issued by the IRS plummeted by over 80% (2,816,000 to 493,000), and the IRS took on average of about three times longer to issue them in 2026 (36 days) as it did in 2025 (13 days).
The IRS also closed many of its in-person Taxpayer Assistance Centers. In addition to problems answering phone calls, the IRS served about 15% fewer taxpayers in person in 2026 than it did during the 2025 filing season (626,000 compared to 740,000). IRS officials attributed this decline to fewer open locations and less demand for in-person service.
The number of fully staffed TACs declined significantly compared to recent years, from 110 in 2024 to 102 in 2025 to only 42 in 2026. The number of understaffed but open TACs this year was 276, up from 240 last year, while the number of unstaffed or temporarily closed TACs increased to 35, up from 21 last year.
The IRS processed about 98% of the 177 million individual and business returns that it received during the 2026 filing season, the same percentage as last year. Most of the processed returns were filed electronically. Taxpayers e-filed 95% (168 million) of returns in 2026.
But there were stark differences in the number of paper returns processed, even after the delays. The number of individual and business paper returns that the IRS received (8.9 million) decreased by 19% from the 2025 filing season (11 million). Over the same period, IRS staff processed 46% fewer individual paper returns and 80% fewer business paper returns.
According to IRS officials, fewer paper returns were processed because they were delayed for two main reasons:
Unavailable systems: To process paper returns, the IRS uses two systems to either manually transcribe or digitally scan returns to convert the information into an electronically readable format. The IRS's individual paper processing system was unable to process tax year 2025 returns for the first six weeks of 2026, and its scanning system for business paper returns was unable to process tax year 2025 returns for the entire 2026 filing season, according to IRS officials. They told the GAO that these systems were not ready for the filing season start due to the recent loss of experienced IT acquisition staff, which delayed the timely submission of procurement requirements needed to implement programming updates for the new tax law changes and transition to disbursing refunds only through digital payment options (e.g., direct deposit).
IRS documentation showed the IRS programmed its individual processing system in January 2026 to be able to process tax year 2025 business returns. However, IRS officials told the GAO that it took longer to process business returns with this system compared to the scanning system.
To mitigate the effects of these systems being unavailable for tax year 2025 returns, the IRS sent more of its inventory of paper tax returns than planned to the outside vendors that it uses to scan paper returns as part of the IRS's long-term digitalization strategy. With the IRS's capacity to process business returns limited for the entire 2026 filing season, IRS officials said they asked vendors to prioritize scanning business returns. The IRS sent about 3.7 million business paper returns to outside vendors for scanning during the 2026 filing season—a 725% increase from the 443,000 business paper returns that the IRS sent last year. By the end of the 2026 filing season, vendors had scanned nearly all the business paper returns they received and over four times the amount (860,000) processed by the IRS staff.
Reduced staffing: Officials from the IRS's Submission Processing unit, which is responsible for processing tax returns, told the GAO in April 2026 that the SP unit did not have enough staff to process returns timely. The SP unit ended the 2026 filing season with 18% fewer staff (8,111) than it had at the end of the 2025 filing season (when it had 9,850 employees). The GAO has previously reported that about 2,900 SP staff departed the IRS by the end of fiscal year 2025, most of whom left via deferred resignation or early retirement programs. IRS officials told the GAO that the Treasury Department approved the hiring of 1,600 employees by the unit for the 2026 filing season. They also said the 2025 partial federal government shutdown resulted in job announcements and hiring events being delayed until December 2025. As a result, by early April 2026, SP had hired only 1,158 employees (72%) of its approved 1,600 staff target. SP officials told the GAO they would continue to hire and onboard new staff into May 2026.
