Paper filers waited nearly three times longer for refunds during the 2026 filing season, and the IRS issued more than 80% fewer paper checks, as a shift to direct deposit and staff shortages slowed operations, according to the Government Accountability Office. (GAO-26-109074, 7/23/2026)
Staffing, system gaps
The IRS processed about 98% of the 177 million individual and business returns it received, the same share as in 2025, with 95% filed electronically. Still, paper filers waited longer. The average time to process a paper individual income tax return climbed to 30 days, well above the agency’s 13-day goal and up from 16 days in 2025, the GAO found in a report made available August 10.
Business payroll tax returns took even longer, averaging 72 days against a 32-day policy.
The GAO tied the delays to unavailable systems and reduced staffing. The IRS’ individual paper processing system could not handle tax year 2025 returns for the first six weeks of the season, and its scanning system for business paper returns was unavailable the entire season. Officials said the systems were not ready because of the recent loss of experienced IT acquisition staff.
And the Submission Processing unit, which handles returns, ended the season with 18% fewer staff than it had a year earlier, and unit officials said in April 2026 that they lacked enough staff to process returns on time.
To compensate, the IRS routed far more paper to outside scanning vendors, sending about 3.7 million business paper returns for scanning, a 725% increase from the prior year. The staffing losses were foreshadowed in a March report that warned of severe risks to future operations after major workforce reductions in 2025.
Paper check refund delays
Refund totals rose even as paper checks slowed. The IRS issued $296 billion in refunds by the end of the season, up $43 billion, or 17%, from 2025, and the average refund grew 11% to $3,275. The agency tied the increases to new deductions for qualified tips and overtime pay.
Most paper check refunds were delayed by weeks under a transition to electronic payments required by a March 2025 executive order. Beginning in January 2026, the IRS notified taxpayers who did not provide direct deposit information that their refunds could be held. The agency sent about 4.2 million such notices, giving recipients 30 days to supply a bank account number before it would issue a paper check after six weeks.
As a result, the number of paper check refunds fell by more than 80% to 493,000, and the average time to issue one rose from 13 days in 2025 to 36 days in 2026. Direct deposit refunds moved far faster, with nine out of 10 issued within 21 days.
Taxpayers turn to online self-service
The IRS scaled back its live telephone target to shift resources toward its correspondence backlog. It replaced its previous 85% level of service goal with a new measure, the Assistor Service Rate, and set the goal at 70%. The agency reported a 73% rate, exceeding the lowered target but trailing the 87% level of service it posted in 2025.
Fewer callers reached the agency overall. The IRS received 24.7 million calls, down 11% from 2025, and automation answered a larger share of them. Even so, the average wait to reach a representative more than doubled, from three minutes to eight minutes.
Taxpayers increasingly turned to self-service instead. Logins to individual online accounts reached about 155 million, the most in six years, and visits to the “Where’s My Refund?” tool rose 9% to 346 million.
In-person service declines
In-person help also contracted. The IRS served 626,000 taxpayers at its Taxpayer Assistance Centers, a 16% drop from the 2025 filing season. Officials attributed the decline to fewer open locations and lower demand for face-to-face service.
Staffing remained the central constraint. The number of fully staffed centers fell to 42 from 102 a year earlier, while the number of unstaffed or temporarily closed offices nearly doubled, rising to 35 from 18 in 2024. The IRS permanently closed 10 centers after the 2025 season and, according to the GAO, is awaiting Treasury approval of hiring plans that could reopen some sites.
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