The Internal Revenue Service managed to issue refunds to the vast majority of taxpayers without significant delays this year, even after slashing more than a quarter of its workforce and rolling out sweeping tax changes, according to the agency's independent watchdog.
Erin Collins, the national taxpayer advocate, told Congress in a report Wednesday that the IRS processed nearly 139 million individual returns and delivered more than 90 million refunds during the 2026 filing season. The average refund rose to $3,275, up from $3,230 last year.
“Entering the 2026 filing season, there was considerable uncertainty about the IRS’s ability to successfully manage a convergence of major challenges: implementation of sweeping new tax legislation, significant workforce reductions, and extensive leadership turnover,” Collins wrote. “In the end, the IRS performed better than expected in most respects.”
Those challenges were formidable. In January, Collins warned that cutting more than 27 percent of the IRS workforce over the prior year could cripple the filing season. The agency had over 102,000 employees as of January 2025 but shrank to fewer than 75,000 by December, after the Elon Musk-led Department of Government Efficiency targeted it early in the second Trump administration.
Despite the cuts, the IRS delivered 98 percent of refunds via direct deposit, minimizing delays for most filers. Collins credited the agency for “improving its technology year by year,” pointing to the “Where’s My Refund” tracker as a tool that reduced call volume and in-person visits.
The One Big Beautiful Bill Act, signed by President Trump last July, introduced new deduction opportunities. Collins had warned in January that implementing the law could cause problems, but her latest report found the agency handled the changes successfully.
Still, the filing season was “frustrating, confusing, and financially disruptive” for millions of taxpayers, Collins noted. Callers waited an average of 14 minutes on hold—six minutes longer than in 2025—even though total calls dropped by roughly 2.1 million. Customer service staffing fell 22 percent between January and December 2025, with new hires lacking the experience of those who left.
Taxpayers relying on paper checks faced delays, and low- and middle-income filers waited up to 20 months for refunds due to identity theft issues. Collins urged the IRS to preserve telephone assistance, in-person service, clear notices, and effective case resolution as it transforms operations.
“Taxpayers must be able to understand what is expected of them, obtain help when they need it, and trust they will be treated fairly when problems arise,” she wrote. “Those principles are fundamental to taxpayer rights and essential to maintaining public confidence in our tax system.”
For context on government efficiency and oversight, the DOJ's recent probe into a NYC coffee shop highlights ongoing debates about enforcement priorities. Meanwhile, the new nonprofit crypto watchdog shows how independent oversight is evolving in other sectors.
