The Treasury Inspector General for Tax Administration (TIGTA) is concerned that the IRS may not be ready for the 2026 filing season, even after approvals to hire 5,700 new employees for Submission Processing and Accounts Management functions.
A January 26 memo to the IRS commissioner warned that agency hires as of late December were far short of those authorized. Changes to the hiring process and last year’s shutdown delayed onboarding these new employees, said TIGTA. Beyond that, the memo cautions that modernization efforts meant to offset some of the last year’s staffing reductions may not be far enough along to impact the current filing season.
Hiring Challenges
The memo reports that overall IRS staffing as of October 2025 was comparable to staffing four years earlier, before the Inflation Reduction Act provided additional resources to the agency. However, the agency’s Submission Processing function – which processes original and amended returns and resolves return errors – had 1,626 fewer employees as of October 2025 than it had in 2021.
Former IRS Commissioner Danny Werfel, speaking at the USC Gould School of Law 2026 Tax Institute explained that “the IRS is highly formulaic in terms of input and output” – meaning things like phone center level of service and backlog movement is directly correlated to staff headcount.
“It’s so reliably predictive that it’s one of the few areas where the Congressional Budget Office in D.C. will basically assign a budget score,” he added. “You’re adding 10 people to the IRS, that automatically tells you how much money you’re going to save,” Werfel said of CBO scoring tactics. Likewise, cutting 10 people “automatically tells you how much money you’re going to lose.”
Submission Processing was approved to hire 2,200 employees for the current filing season, including tax examiners and clerks. But TIGTA reports that as of December 30, 2025, it had onboarded just 50 new employees. The memo stresses that’s just 2% of the authorized hires.
While Accounts Management – which answers taxpayer calls and processes adjustments – had more employees in October 2025 than four years ago, it was also approved to hire for the current filing season. Specifically, it was authorized to hire 3,500 new employees, the amount the IRS projected would be needed to achieve an 85% toll-free telephone level of service.
Accounts Management had onboarded 2,300 new employees as of December 2025. However, TIGTA warned that in prior years, hiring and onboarding occurred four months earlier, with new hires fully trained by January 1. To make up for the short training window, TIGTA reports that new Accounts Management hires are “only being trained to screen calls, i.e., route them to the right assistor, and answer basic questions on refunds.” Previously, staff in this role would also “answer individual telephone questions and individual amended tax return questions.”
TIGTA attributes the hiring delays and shortfall to new procedures requiring approvals from IRS Chief Executive Office Frank Bisignano and Treasury before posting jobs and making employment offers.
Last year’s lengthy government shutdown also contributed, says TIGTA. Submission Processing could announce open positions during the shutdown but could not conduct in-person hiring events.
Taxpayer Service Impacts
TIGTA reports that to make up for hiring shortfalls, Accounts Management leadership said it would reduce its telephone level of service goal to just 70%. The watchdog equates that level with “answering fewer than one-in-five incoming calls to the IRS toll-free telephone lines.”
However, the telephone service metric is changing for this filing season, per Bisignano. The stated aim of the change is to account for new technology and service channels. Werfel said the change “is good news and bad news.” He acknowledged the metric’s weaknesses but is concerned that by starting with a new “baseline” this year, it will be difficult to see the impacts of staffing cuts on taxpayer service.
“What I’d love to see is these things tracked in parallel,” said Werfel. He noted that it’s important to understand impacts of “these divestments in people” and “lower funding levels for technology.”
Role of Modernization Initiatives
TIGTA’s memo acknowledges the IRS is working to offset staffing losses through modernization efforts – but cautions new capabilities may not be available in time for the current filing season. And the agency has yet to release a detailed modernization plan, Werfel noted in his recent remarks.
Meanwhile, the IRS had a 2 million individual-return inventory as of December 2025. That inventory “will be carried into the 2026 Filing Season and may affect the IRS’s ability to timely process tax returns during the filing season,” said TIGTA.
Among the agency’s modernization efforts are the Zero Paper Initiative, aimed at streamlining paper-filed return and correspondence processing. The IRS has selected four contractors to digitize paper tax returns this filing season, said TIGTA. As of early December, vendors had digitized 4% – or 379,000 – Form 1040 paper-filed returns.
The IRS has also been testing automated processing of electronically filed Forms 1040X. Submission Processing planned to implement the automated process this month – but TIGTA cautions that “not all capabilities will be available for the 2026 Filing Season.”
In addition, the IRS is developing Taxpayer 360, which includes AI-enabled tools. Taxpayer 360 is intended to make it easier for IRS staff to help taxpayers. However, TIGTA reports that pilot program participants have encountered bugs and other issues. And Taxpayer 360 isn’t expected to be made widely available to Accounts Management until September 2026.
While these efforts may be a step in the right direction in terms of efficiency, Werfel said a detailed IRS modernization plan is key. “That’s how you hold the administration and the leadership accountable for the modernizations that they’re publicly committing to,” he stressed. He explained that when he held the commissioner role, he viewed the then-IRS modernization plan as his “public to-do list.”
Beyond accountability, Werfel said it’s important that the tax community have a chance to see the full Trump administration IRS modernization plan to ensure it “matches up with our pain points.” That transparency will allow practitioners to “give feedback” on the plan and ask Congress “tough questions,” he added. Among the potential questions: “Do we have the money for it?”
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