The National Taxpayer Advocate, Erin M. Collins, released the Fiscal Year 2026 Objectives Report to Congress on June 25, 2025. The report reviews the 2025 filing season and flags challenges the Internal Revenue Service (IRS) and taxpayers will face heading into 2026.
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers resolve problems and recommends administrative and legislative changes to improve the system. Led by Collins, TAS serves as the “voice of the taxpayer” within the IRS and before Congress.
A brief look back and challenges ahead for the IRS
The report reviews the 2025 filing season and flags risks heading into 2026, including the following:
- Filing season by the numbers: About 92% of returns were e-filed, and approximately 140.6 million returns were received. About 86 million refunds were issued, and the average refund was $2,942. Approximately 62% of filers received refunds.
- Suspended returns: The IRS “suspended” more than 13 million returns for additional review, which delayed refunds.
- Identity theft: This issue affects returns in two ways. First, the IRS flagged 2.1 million returns for suspected identity theft, triggering identity verification and potential delays. Second, confirmed identity theft cases, where taxpayers have already been victimized by tax fraud. Those cases go to the IRS Identity Theft Victim Assistance (IDTVA) team. By the end of the 2025 filing season, the backlog stood at about 387,000 cases, and TAS reports an average resolution time of about 20 months.
- Loss of personnel: TAS reported IRS staffing fell about 26% from the start of the 2025 season to June 2025, from roughly 102,000 to under 76,000 employees. Collins noted IT staff declined by 27% and business services by 22%, both of which the employees are integral to the return process. Overall, 9,000 fewer employees than at the outset of the 2025 tax season. TAS urges accelerated hiring and training ahead of 2026 to effectively handle the next filing season.
- IT upscale: The TAS recommends a faster digitization process of paper returns and creating functional online accounts that allow taxpayers to see if they are behind on taxes or transactions. More robust accounts could also assist taxpayers with an IRS audit and allow tax professionals to help their clients more effectively. Last, the IRS has about 60 case management systems that store taxpayer data and the systems that do not fully communicate with one another. The TAS recommends continued integration of these systems to form an integrated system.
- Employee Retention Credit (ERC): The TAS recommends completion of the processing of valid ERC claims. This tax credit is the source of IRS criminal investigations for those who intentionally filed fraudulent applications to obtain tax credit refunds.
With the loss of personnel and the unstable administrative climate, the 2026 tax season will hinge on progress in these areas.
Concerned about an IRS audit or investigation?
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