Behind Smooth Tax Season Lurk Delays From IRS Workforce Cuts

The outlook for speedy service from the IRS after April 15 won’t be as rosy as it’s been so far because cuts to the agency workforce will likely delay help for those who file late or seek an extension, tax professionals say.

The IRS has processed more than 88 million tax returns as of the most recent filing numbers, which came out March 28. That’s almost identical to the number of returns processed during the same period last year. The number of returns received so far is 89.5 million, compared to 90.3 million last year.

These numbers show that the workforce cuts have yet to rattle taxpayer services, said Pete Sepp, president of the National Taxpayers Union.

The latest plan from the Trump administration calls for a 20% to 25% reduction in IRS workers, though it’s unclear how that would trickle down into different divisions. An earlier plan called for an 8% cut to taxpayer services, which had about 42,000 employees at the beginning of the year, by May 15.

Still, tax practitioners anticipate delays for those who have filed for extensions, due in October, or those who have discrepancies in their returns and need to work with the IRS to resolve them.

The IRS didn’t immediately respond to a request for comment.

“It’s not likely that this filing season will show a great deal of impact from the personnel changes,” Sepp said. “As for the rest of the year and for those who have disputes with the IRS, hold on to your hat.”

Filing Season Changes

Tax professional are tweaking their advice to clients because of concerns about possible delays during this filing season. They’re also bracing for more of their clients to ask for extensions—sometimes a signal that a taxpayer won’t file, said Carlos Lopez, president of Latino Tax Professionals.

Twila Midwood, president of the National Association of Enrolled Agents, said she encouraged clients to use the IRS website to make tax payments because they receive an automatic confirmation.

“We’re trying to do more things that don’t require human contact,” said Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, who’s pointing clients to tools such as the “Where’s my refund?” tracker.

There’s a longstanding trend of people filing their taxes later, in part because they’re receiving tax forms from their brokers later into the season, O’Saben and Midwood said.

This year some taxpayers have also waited with the hopes of a new tax law package. President Donald Trump campaigned on eliminating taxes on tips and Social Security benefits, a hot topic among clients, Midwood said.

Many immigrants have also waited longer than usual to file their taxes this year because of deportation worries, Lopez said.

The IRS has long encouraged people to pay their taxes even if they aren’t in the country legally, giving them individual taxpayer identification numbers when they don’t have a Social Security number. The IRS had issued 26 million ITINs by the end of 2022 since the program’s inception in the late 1990s, according to a Treasury Inspector General for Tax Administration report.

“They’re not here for a handout,” Lopez said, adding these taxpayers want to comply with the tax law. “They’re here for a job.”

Delays Ahead

Expect a slowdown from the IRS in the months ahead for those who filed paper or amended returns, tax professionals cautioned.

“I think we’re going to see a huge disruption in service in anything that the IRS has to touch” after May, Midwood said.

Sepp said he expects delays for taxpayers trying to resolve disputes with the IRS appeals office, asking the taxpayer advocate for help, and those on a quarterly filing schedule, such as nonprofits.

For example, a short-staffed chief counsel office could be less inclined to compromise with taxpayers during disputes, he said. And if the taxpayer advocate service is overwhelmed, that will trickle down to more work for the volunteer income tax assistance programs and low-income tax clinics.

The administration had initiated termination of 128 IRS offices that host taxpayer assistance centers and five that include call sites earlier this year but decided to keep them open through this filing season. It’s unclear how many might close in the coming months.

“There are areas at the IRS where smart personnel realignments and reductions could actually improve taxpayer service,” Sepp said. “What’s the plan? We asked that during the Biden administration, and we’re asking it now.”