TIGTA warns of strain as IRS faces staff cuts and modernization delays

The latest report from the Treasury Inspector General for Tax Administration (TIGTA) raises serious concerns about the 2026 tax filing season. While the IRS managed to keep the 2025 filing season on track, TIGTA warns that workforce reductions and delays in modernization projects could make it challenging to maintain that same level of service next year.

IRS’ success in 2025 came under pressure

TIGTA’s new report highlights the pressure building inside the agency as it faces the challenges of doing more with less. Although the IRS met many of its performance goals for 2025, it may struggle to repeat that success if staffing shortages persist.

According to TIGTA, the IRS processed approximately 142.2 million returns during the 2025 filing season, up from roughly 139.9 million in 2024. The agency exceeded its telephone service goal of 85%, meaning roughly 85 out of 100 calls that reach a live-agent queue on the IRS’s main help lines are actually answered by a person, and maintained reasonable refund turnaround times. However, TIGTA found that critical divisions supporting the filing season have lost between 17% and 19% of their workforce. The cuts were part of broader staffing reductions that began in early 2025.

Deep workforce cuts affect key operations

The TIGTA workforce snapshots from March and May 2025 indicates that more than 11,400 IRS employees, approximately 11% of the total workforce, either accepted Deferred Resignation Program offers or were terminated during their probationary period. Those departures hit tax examiners (27%), revenue agents (26%) and the Accounts Management function (-17%) especially hard. Some reports suggest that when separation buyouts, retirements and other exits are factored in, the workforce reduction may reach closer to 25%.

The agency has also faced procedural setbacks. TIGTA found that thousands of probationary employees were terminated without proper adherence to internal protocols, prompting the IRS to reinstate more than 7,300 employees. The reversals highlight the strain of trying to cut costs quickly while maintaining compliance with federal employment rules.

Service disruptions expected for 2026

For 2026, TIGTA is warning that taxpayers and practitioners may experience service delays across multiple fronts. Telephone and correspondence response times may slow as fewer employees handle the growing workload. Taxpayer service representatives, who are already managing high call volumes, may struggle to sustain the same level of performance achieved in 2025. The backlog of paper returns and amended filings could also grow if modernization projects continue to fall behind schedule.

Delayed modernization efforts could add to backlogs

The Zero Paper Initiative was supposed to be a game-changer, converting more paper submissions into digital form to reduce manual data entry. With the initiative delayed, TIGTA says the IRS may have to rely heavily on seasonal staff or other temporary measures to manage paper processing. This creates additional uncertainty for taxpayers waiting on refunds, credits or amended return updates.

Compliance and enforcement units under strain

Another concern is that the IRS’s compliance and enforcement functions are also being stretched thin. The Small Business/Self-Employed’s Examination function and other IRS audit units have lost experienced employees at a time when the agency needs skilled staff to handle complex cases. The reduced workforce could result in slower responses to notices, postponed examinations and limited audit coverage, which impacts both taxpayers and practitioners.

Key risks tax professionals should note

TIGTA’s findings point to a few key risks that tax professionals should prepare for now. The first is a potential disruption in customer service. IRS helplines, correspondence units and Taxpayer Assistance Centers may face longer turnaround times. The second is the likelihood of delayed guidance or responses to practitioner inquiries as technical staff focus on core processing work. The third risk is inconsistent communication during high-volume periods, particularly when new staff are quickly brought in to fill gaps.

How tax pros can prepare for 2026

For tax professionals, preparation starts with understanding how these changes will affect day-to-day operations. Review your client list and identify those who may require IRS contact in 2026, such as clients awaiting amended returns or those involved in audits. Set expectations early about possible response delays and encourage electronic filing whenever possible to minimize reliance on paper processes.

Another smart move is to make greater use of digital tools. E-services, secure client portals and automation can reduce bottlenecks in your own office. Encourage clients to sign up for IRS online accounts to track refunds and access tax transcripts directly. Keeping informed about TIGTA updates and IRS press releases will also help you anticipate changes before they affect your workflow.

Stay proactive

The 2025 filing season demonstrated the IRS can deliver strong performance even under pressure, but that success came with caveats. Many key positions were temporarily exempted from cuts to ensure smooth operations. As those exemptions expire and staffing levels continue to fall, 2026 could look very different.

TIGTA’s latest report is a call to prepare. The IRS is facing significant operational headwinds driven by workforce reductions, modernization delays and shifting priorities. For practitioners, the best strategy is to stay updated and use technology to bridge the service gaps that may widen next year.

To stay informed about the latest IRS updates and filing season changes, attend NATP’s Tax Season Updates, offered both in-person and virtually.