Tax season with a hollowed-out IRS: What do taxpayers need to know?

Chaos has swept through the federal government this year, and the IRS is no exception. That’s bad news for taxpayers: While the short-term impact depends on your personal tax situation, the long-term outlook should make you extremely worried.

In the last year, the Internal Revenue Service lost 27% of its staff and three-quarters of its senior leadership. The administration cycled through an unprecedented seven IRS commissioners before making the IRS’s day-to-day operations a second job for the head of Social Security. Add to this the longest government shutdown in history as the agency was implementing a complex new tax law, and taxpayers certainly have cause for concern. Major improvements are off the table; many modernization efforts have ground to a halt and “Direct File,” the IRS’s excellent free public tax preparation software, was dismantled.

Nonetheless, if your taxes are relatively simple, you file digitally, and you do not make any mistakes, this tax year will probably look like last year—some annoying paperwork and a relatively speedy refund.

A few groups, however, are likely to face headaches. Taxpayers with tips or overtime pay will have to unravel the late, limited, and legalese guidance from the IRS—and benefits may be smaller than they anticipate. Taxpayers who use paper may see longer waits. In April, the IRS stopped developing in-house paperless processing and outsourced scanning and digitization to contractors, but that effort has faced delays. The IRS is also phasing out paper checks, which will make it harder for unbanked taxpayers to access their refunds.

The agency had also aimed to hire 2,200 employees to help process returns. By the end of the year, however, it had onboarded just 50—2% of its goal. And employees working in the human capital office and information technology, some of whom have no experience in taxpayer services, have been involuntarily detailed to work on the filing backlog.

And then there are the taxpayers unlucky enough to be targeted by scammers. The IRS will be less able to address fraud and identity theft, putting more taxpayers at risk. The Taxpayer Advocate has guidance about what you can do to protect yourself. One easy step is filing your taxes early.

Those who need help from the IRS will find it harder to come by. Though Secretary Bessent downplayed cuts in spring, the IRS was scrambling to hire thousands of additional employees by mid-summer. In late July, the IRS reported needing to hire 3,500 more people to maintain its 2025 level of phone service. After rescinding a job posting for permanent hires, the agency rushed to attract seasonal workers for its call centers. Only 66% of the taxpayer service hires—who are typically onboarded by the end of August—were onboarded by the end of the year. As a result of staffing challenges, the agency has pared back the scope of employee training and dropped its goals for filing season level of service from 85% to 70%.

How much will service suffer? We may not even know. The IRS CEO and commissioner of the Social Security Administration, Frank Bisignano, announced that the agency is sunsetting a prominent measure of customer service. Will this make the data clearer, or disguise declines in service? Our colleagues at the Tax Policy Center, Barry Johnson and Janet Holtzblatt, have noted that “the new metrics may be an improvement,” but “[m]uch more information is needed to determine if the new metrics will provide better measures of the taxpayer’s experience.” Bisignano’s record is not reassuring. After long call waits at Social Security were in the news last year, data on the agency’s performance disappeared from public view.

Long waits, delayed refunds, identity theft—these might seem like enough for taxpayers to worry about. But the short-term risks pale in comparison to the long-term challenges. 

We can expect to see a decline in tax enforcement, particularly when it comes to the wealthy. IRS criminal investigations of abusive tax schemes dropped by 63% in the last fiscal year to a 10-year low. The agency had about 100,000 fewer open audits in fiscal year 2025 compared to the previous two years due to staffing losses. The IRS Large Business and International division in particular lost about 25% of its staff; the office that audits the ultrawealthy had lost 38% of its employees by March 2025. The annual “tax gap”—money owed to the government but not paid voluntarily and on time—was estimated at about $700 billion as of 2022, and most of that shortfall is estimated to be due to underreporting by high earners. Cuts to the IRS workforce could reduce revenue by tens of billions more. That means greater wealth consolidation, less money for public purposes, and a shifting of the cost of government onto the poor and honest.

The other danger is the weaponization of tax administration.

In violation of decades-long commitments to taxpayer privacy, the administration has sought to use IRS data to target millions of immigrants, an effort that led senior IRS officials to resign. The IRS then shared information about at least 47,000 taxpayers before judges in two distinct court cases blocked additional data sharing. Thousands of the shared records were disclosed improperly, a recent government court filing shows. Of the 47,000 taxpayers whose data was shared, the IRS violated the Internal Revenue Code’s privacy protections in “approximately 42,695” cases, Judge Colleen Kollar-Kotelly noted in a February court order.

As recent months have made clear, immigrants are not the only targets of administration forces, and this applies to tax enforcement as well. In his first term, President Trump speculated about using tax enforcement to punish his perceived enemies; this time, his administration has moved to rescind the nonprofit tax status of Harvard University and other major civil society institutions. In January, the longtime and highly respected leader of IRS Criminal Investigations announced his retirement; in October, it was reported that leadership changes were part of a plan to target left-leaning organizations and donors. 

Weaponization of the tax code has very serious implications for the survival of U.S. democracy. Strongmen overseas regularly use the tax apparatus to quash dissent. Even if abusive tax enforcement efforts eventually fail in court, they will have an impact. Fear of the tax man will likely provoke anticipatory compliance from institutions with weak-willed or short-sighted leadership. That compliance need not come in the form of wholesale adoption of the ruling party line; it can be the cumulative effect of unreported data, weakened headlines, and new priorities less likely to run afoul of the regime. If the institutions dedicated to producing public knowledge choose to silence themselves, it will leave American voters less informed about the activities of their government and less able to hold that government to account.

Thus, the massive damage inflicted on our tax agency means far more than additional paperwork, longer phone waits, slow refunds, or even potential fraud. It is not merely the convenience of taxpayers, but the sovereignty of the American people that is at stake.