IRS Staffing Cuts and New Tax Laws Could Disrupt 2026 Filing Season

The Internal Revenue Service (IRS) is facing significant challenges that may impact the 2026 tax filing season. Recent legislative changes, combined with substantial staffing reductions, have raised concerns about the agency's ability to effectively process tax returns and assist taxpayers.

Key Developments:

• Staffing Reductions: The IRS workforce has decreased by approximately 26%, from 102,113 to 75,702 employees. This reduction is largely due to buyouts and layoffs initiated by the Department of Government Efficiency. Critical areas affected include taxpayer services, small business/self-employed divisions, and information technology.

• Budget Cuts: The proposed 2026 budget includes a further 20% reduction in IRS funding, amounting to a 37% decrease compared to previous supplemental funding levels.

• Legislative Changes: The recently enacted One Big Beautiful Bill Act introduces numerous tax law modifications, some of which apply retroactively to the 2025 tax year. These changes necessitate rapid updates to tax forms and programming, placing additional strain on the already burdened IRS. 

Implications for Taxpayers:

• Processing Delays: The combination of staffing shortages and new tax law implementations may lead to significant delays in tax return processing and refund issuance.

• Customer Service Challenges: Reduced personnel in taxpayer services could result in longer wait times and decreased availability of assistance for tax-related inquiries.

• Increased Risk of Errors: The rapid implementation of complex tax law changes increases the potential for errors in tax filings, both by taxpayers and the IRS.

Recommendations:

• Early Preparation: Begin organizing tax documents and understanding new tax provisions well in advance of the filing season.

• Professional Consultation: Consider seeking assistance from tax professionals to navigate the complexities of the new tax laws and ensure accurate filings.

• Stay Informed: Regularly check for updates from the IRS and reputable news sources to stay informed about any changes that may affect your tax situation.

At Kamish & Associates, we are committed to helping you navigate these challenging times. Our team of experienced tax professionals is here to provide guidance and support to ensure your tax filings are accurate and timely.

For personalized assistance, please contact us at 813-560-1832.