National Taxpayer Advocate delivers Annual Report to Congress; finds taxpayer service was strong in 2025 but foresees challenges for taxpayers who encounter problems in 2026. An overview is below, but read the full post for more information on the impact of tax law changes, balancing telephone service and case processing, and IRS plans to outsource the processing of paper-filed tax returns. Additionally, the report emphasizes the 10 most serious taxpayer problems.
IR-2026-15, Jan. 28, 2026
WASHINGTON — National Taxpayer Advocate Erin M. Collins today released her 2025 Annual Report to Congress, finding that taxpayers generally fared well in their dealings with the IRS in 2025 and that most taxpayers are likely to have a smooth experience in 2026. However, the report cautions that the upcoming filing season is expected to present greater challenges for taxpayers who encounter problems.
“Among the reasons the 2025 filing season went well was that the IRS had its largest workforce in many years and faced no major tax law changes that required implementation during the filing season,” Collins writes. “Entering 2026, the landscape is markedly different. The IRS is simultaneously confronting a reduction of 27% of its workforce, leadership turnover, and the implementation of extensive and complex tax law changes mandated by the [One, Big, Beautiful Bill] Act, many of which apply retroactively and require significant IRS programming, guidance, changes to tax forms and instructions, and taxpayer education.”
Despite these challenges, Collins says most taxpayers will be able to file their returns and receive their refunds without delay. “For the significant majority of taxpayers who file their returns electronically, who include their direct deposit information, and whose returns are not stopped by IRS processing filters, the process will be seamless,” she writes. “Their returns will be processed quickly, and if they are due a refund, they will receive it without delay.” However, she notes, “the success of the filing season will be defined by how well the IRS is able to assist the millions of taxpayers who experience problems.”
Taxpayer service in 2025
During 2025, the IRS processed more than 165 million individual income tax returns. About 94% were submitted electronically, and 6% (about 11 million) were paper-filed. Approximately 104 million taxpayers (63%) received refunds, with an average refund amount of $3,167. While most refunds were issued timely, about 3.6 million taxpayers received their refunds beyond the IRS’s normal processing time, with average wait times of 7 weeks for e-filers and 14 weeks for paper filers.
In addition, longstanding delays in resolving identity theft victim assistance cases persisted during 2025, with hundreds of thousands of taxpayers waiting an average of more than 21 months for the IRS to resolve their cases and issue refunds due. Particularly for lower-income taxpayers, these delays can create or exacerbate financial hardships. Collins has previously called these delays “unconscionable,” and her report reiterates a prior recommendation to keep IDTVA employees focused exclusively on identity theft casework until the average case resolution time is reduced to 90 days.
2026 filing season challenges
The report says the combination of staffing reductions and significant retroactive changes in the tax law has created challenges for taxpayers and the IRS alike. It also examines the challenges the IRS will face in balancing telephone service with case processing, as well as the potential risks of outsourcing the processing of millions of paper-filed tax returns.
It goes on to state that, for taxpayer service, customer service representatives who answer telephone calls and process taxpayer correspondence and casework are particularly important. The IRS generally receives over 100 million telephone calls and several million pieces of taxpayer correspondence each year. In 2025, the number of CSRs was reduced by 22%. Although the IRS backfilled some of these positions late in the year, the number of CSRs remains substantially lower than last filing season, and the new hires have less experience than the employees who departed. “To fulfill its mission, the IRS must align hiring decisions with operational needs and emerging challenges, rather than target a predetermined staffing level,” Collins writes. “Workforce planning should be guided by the work necessary to provide timely, accurate service to taxpayers and to protect taxpayer rights, as well as by the most effective ways to deliver those outcomes.
