What TIGTA’s report means for the 2026 tax filing season

The annual tax filing season is the most demanding period for the Internal Revenue Service, a time when millions of returns are filed, refunds are issued and taxpayers seek assistance. When the IRS struggles during these critical months, tax professionals feel the immediate impact through processing delays, unanswered correspondence and frustrated clients.

A recent memorandum from the Treasury Inspector General for Tax Administration (TIGTA) outlines serious concerns about the IRS’s readiness for the 2026 filing season. The memo highlights a troubling combination of significant staffing reductions, growing case inventories and delayed modernization efforts that could severely affect return processing and taxpayer service in the months ahead.

Growing inventories heading into filing season

TIGTA reports that key IRS inventories have increased dramatically, creating a significant backlog before the filing season even begins. As of December 2025, inventories in major return processing programs reached approximately 2 million individual returns and cases, a figure 129% higher than pre-pandemic levels.

The increases span multiple categories familiar to tax practitioners:

• Amended returns: over 548,000 pending
• Paper tax returns: nearly 300,000 unprocessed
• Error resolution cases: over 126,000 awaiting action
• Correspondence: more than 375,000 pieces of mail

TIGTA attributes this growth to recent workforce reductions and the October 2025 government shutdown, which limited the IRS’s ability to work down existing backlogs. This carryover inventory creates downstream effects, as unprocessed returns can delay refunds, trigger erroneous notices and increase interest payments. TIGTA notes the IRS paid more than $2.6 billion in interest to individual taxpayers during the 2025 processing year, much of it tied to such delays. 

Staffing reduction and hiring delays

Staffing is another major concern. By October 2025, the IRS had lost roughly 19,000 employees, representing 19% of its workforce. Key filing season programs, including Submission Processing and Accounts Management, experienced similar reductions, returning overall staffing to levels comparable to October 2021, before Inflation Reduction Act (IRA) funding was available.

More troubling is the IRS’s struggle to onboard new hires. The Submission Processing function, which handles original and amended returns, was approved to hire 2,200 employees for the 2026 filing season but had onboarded just 50 employees (2%) by the end of December 2025. With training taking 60 to 80 days, these new hires will not be ready to assist during the peak of filing season.

While the Accounts Management function onboarded a larger share of its approved hires, late approvals forced the IRS to scale back training. New employees are now being trained only to screen calls and answer basic refund questions rather than handle more complex account issues, limiting the availability of meaningful assistance for taxpayers and practitioners.

Taxpayer service expectations adjusted downward

To manage these shortfalls, the IRS is lowering its telephone level of service goal to 70% for the 2026 filing season, a significant drop from the 85% goal in 2025. For context, the last time service goals were this low was during the pandemic-affected 2022 filing season, when the actual service level plummeted to just 18%. In-person assistance may also be limited, as 35 Taxpayer Assistance Centers remained closed as of December 2025.

Modernization delays limit near-term relief

While the IRS continues to pursue modernization, TIGTA cautions that these efforts are delayed and unlikely to deliver meaningful efficiencies during the 2026 filing season. For example, the Zero Paper Initiative had digitized only about 4% of paper-filed Forms 1040, U.S. Individual Income Tax Return, as of early December 2025. Similarly, the promising Taxpayer 360 case management system is still in a pilot phase and will not be widely deployed until after the filing season ends.

What tax professionals should expect

Taken together, TIGTA’s findings point toward another challenging filing season. Tax professionals should prepare for processing delays, manage client expectations around IRS response times and remain proactive when addressing notices. While the IRS will work to overcome these obstacles, the 2026 filing season is shaping up to test the patience of taxpayers and practitioners alike.