The 2026 tax filing season proved largely successful despite the IRS operating with a significantly smaller workforce, according to the National Taxpayer Advocate’s mid-year report released June 24. The agency processed nearly 139 million individual tax returns and issued more than 90 million refunds while managing a 27 percent reduction in staff compared to the previous year.
National Taxpayer Advocate Erin M. Collins described the results as better than expected. “The vast majority of taxpayers filed their returns successfully and received their refunds without significant delay,” she wrote in the report. The IRS’s continued technology transformation emerged as the primary driver enabling the agency to meet filing season goals despite workforce constraints.
About 98 percent of the nearly 139 million returns processed during the 2026 filing season were submitted electronically, allowing most to move through the system via automation without manual intervention. Roughly 65 percent of returns resulted in refunds, and about 98 percent of refunds were delivered by direct deposit. Technology improvements and automation helped prevent what many observers had feared would be a significant operational breakdown given the staffing losses.
The IRS had cut its workforce from approximately 102,000 employees at the start of 2025 to about 74,000 by year-end, driven by a series of firings and layoffs initiated by the Department of Government Efficiency. The Center on Budget and Policy Priorities reported that Congress also cut the IRS enforcement budget by 8 percent for 2026, to the lowest level since 1988 after adjusting for inflation.
However, the report reveals a sharp divide in the filing season’s success. Taxpayers who could file electronically and navigate online systems experienced few problems. Taxpayers who required direct assistance from the IRS encountered significant challenges. The agency received 48.1 million calls during the filing season, answered 9.9 million (21 percent), and saw average hold times of 14 minutes—compared with 50.2 million calls received, 12.4 million answered (25 percent), and 8-minute average waits during the prior season.
Performance on specialized phone lines was particularly weak. The Taxpayer Protection Program line, which handles identity theft cases, answered only 19 percent of incoming calls, with taxpayers waiting an average of 20 minutes. The Installment Agreement/Balance Due line answered 31 percent of calls with 45-minute average wait times. Identity theft victims overall continue to face delays approaching 20 months to resolve their cases, the report found.
Collins emphasized that the IRS’s digital-first strategy, while effective for routine transactions, cannot become digital-only. “Taxpayers who fall outside standard processing channels are often the taxpayers who most need assistance, often because they are elderly, disabled, limited-English proficient, unbanked, or lacking reliable internet access,” she wrote. The agency must preserve meaningful access to telephone assistance, in-person service, and effective case resolution, she argued, to maintain public confidence in the tax system.
Sources
- Internal Revenue Service — National Taxpayer Advocate’s mid-year report to Congress detailing 2026 filing season results, including return and refund processing statistics, electronic filing rates, and phone performance metrics
- ABC News — Report on IRS performance during 2026 tax season, citing National Taxpayer Advocate findings on refund processing and phone accessibility challenges
- Center on Budget and Policy Priorities — Analysis of 2026 IRS enforcement budget cuts to lowest level since 1988 after inflation adjustment
- Government Executive — Coverage of IRS workforce reductions of more than 20,000 employees in the past year
