Wed Feb 04 11:30:00 UTC 2026: ### IRS Struggles with Staffing and Service Amidst Tax Law Changes and Shutdown Threat

The Story:

The Internal Revenue Service (IRS) is facing significant challenges as the filing season begins, including staff shortages, reduced training for new hires, and difficulties implementing recent tax law changes. A report by the Treasury Inspector General for Tax Administration (TIGTA) reveals that the IRS fell short of its hiring goals due to the government shutdown and new approval requirements for hiring plans by IRS and Treasury Department leaders. As a result, the agency is lowering its target for answering taxpayer calls from 85% to 70%. Experts warn that these issues, combined with major tax law changes enacted last summer under the One, Big Beautiful Bill Act, will make this filing season particularly difficult for taxpayers.

The IRS is attempting to modernize operations through initiatives like the Zero Paper Initiative and Taxpayer 360, but these efforts are facing delays and may not fully address the immediate challenges. The agency also faces potential budget cuts, including the rescission of billions in Inflation Reduction Act funds, further complicating its ability to improve service and reduce backlogs.

Key Points:

  • The IRS is lowering its telephone level of service target from 85% to 70%.
  • The IRS fell short of its hiring goals due to a government shutdown and new approval processes for hiring decisions by IRS and Treasury Department leaders.
  • The IRS filled only 2% of its approved submission processing positions by the end of 2025.
  • The IRS saw a 27% staffing reduction last year, including a 22% reduction in customer service representatives.
  • The new “One, Big Beautiful Bill Act” introduces significant tax law changes, making the filing season more complex.
  • The IRS faces a potential budget cut of $1.1 billion and further rescissions of Inflation Reduction Act funds.
  • Modernization efforts, such as the Zero Paper Initiative and Taxpayer 360, are facing delays and may not yield expected benefits this filing season.

Critical Analysis:

The issues at the IRS are compounded by a series of internal and external factors. The government shutdown directly impeded hiring and training efforts. The additional layer of approval required from IRS and Treasury leadership further slowed down the hiring process. The need to quickly fill vacancies has led to reduced training periods. While AI hiring exists (as evidenced by related historical data regarding the use of AI in hiring), the existing AI tools, such as the Taxpayer 360 program, are reporting bugs that need to be resolved before a larger-scale release. This further exacerbates the staffing issue.

Key Takeaways:

  • Taxpayers should expect potential delays in receiving refunds and resolving tax issues.
  • The IRS’s ability to provide timely and accurate assistance is compromised by staffing shortages and inadequate training.
  • Recent tax law changes will likely create confusion and increase the demand for IRS assistance.
  • Modernization initiatives, while promising, are unlikely to provide immediate relief this filing season.
  • Budget cuts and rescissions of funding pose a significant threat to the IRS’s long-term ability to improve service and address backlogs.

Impact Analysis:

The IRS’s current struggles could have significant long-term impacts on tax compliance and public trust in the agency. Delays in processing returns and providing assistance may discourage taxpayers from filing on time and accurately. The potential budget cuts could further exacerbate these issues, leading to a vicious cycle of reduced service and increased non-compliance. This could ultimately impact government revenue and undermine the effectiveness of the tax system. The findings that IRS contractors have never worked with the IRS before and the past security breach by Charles Littlejohn could also lead to increased operational and confidentiality risks to the taxpayer.

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