TIGTA concerned about next tax filing season amid IRS staff cuts

The Internal Revenue Service was able to steer through this past tax season despite extensive staffing cuts, but next tax season could be a problem, according to a new report.

The report, released Wednesday by the Treasury Inspector General for Tax Administration, provided the final results of the 2025 filing season, with an overview of various facets of this past tax season and a warning about next tax season.

"The 2025 tax filing season was successful with several key improvements," said the report. "For example, the IRS processed more tax returns compared to last filing season and exceeded its 85 percent level of service goal on its telephone lines. Several initiatives reduced the IRS workforce since January 2025, but these initiatives had no significant impact on the 2025 Filing Season because critical filing season positions were exempted." 

"However, we are concerned about how this will impact the 2026 Filing Season. Key IRS functions responsible for managing the filing season have lost 17 to 19 percent of their workforce," the report added. "The IRS initiated a Zero Paper Initiative effort to expand scanning and digital processing of paper-filed tax returns, which was expected to mitigate the impact of some of the staffing losses on the upcoming filing season. However, the initiative is already delayed."

TIGTA released an earlier report in July that found the IRS that found over 25% of IRS employees had left the agency this year. It noted that 25,386 employees have either separated, taken a voluntary buyout offer under one of the deferred resignation programs, or used some other incentive to leave. Another 294 employees were sent termination notices due to reduction in force actions.

The remaining 74,299 IRS employees are currently working during this week's government shutdown thanks to funding left over from the Inflation Reduction Act of 2022, but according to the contingency plan that was released by the Treasury Department earlier this week, that only covers five business days. The websites of TIGTA and other inspector generals were closed down during the shutdown, but it was able to send out the new report through the government's email service. 

The report noted that staffing losses in the IRS's Information Technology function and the recently enacted tax legislation create additional challenges for the IRS. "The One Big Beautiful Bill Act will require the IRS to make substantial changes ahead of the 2026 Filing Season, but the agency will have fewer Information Technology resources to timely update processing systems," said the report.

The IRS is also facing challenges next tax season when it comes to answering the phones and catching up on adjustments, IRS officials project they would need to hire around 3,500 new employees to achieve an 85% level of service next filing season on its toll-free telephone service. IRS management also predicts that its Accounts Management adjustments ending inventory for fiscal year 2026 could grow to approximately 6 million, exceeding pandemic levels by nearly 2 million when stacks of unopened mail sat in IRS facilities and cafeteria tables.