The Internal Revenue Service is grappling with severe staffing shortages that threaten to cause widespread delays in tax refunds for millions of Americans this filing season. According to a recent Treasury Department watchdog report, the IRS has lost approximately 27 percent of its workforce since January 2025, leading to a critical backlog of nearly 590,000 amended tax returns.
Staffing Cuts Under the Department of Government Efficiency
The dramatic reduction in IRS personnel followed layoffs implemented by the Department of Government Efficiency (DOGE), which was overseen by billionaire Elon Musk during the early days of the Trump administration. These workforce cuts have left the agency struggling to manage its inventory of filed returns and consumer correspondence effectively.
Amended Returns Pose Greatest Risk
Taxpayers who file amended returns face the highest likelihood of experiencing delayed refund payments. Amended returns are typically submitted by individuals who need to correct errors related to income reporting, deductions, dependents, tax credits, liability calculations, or refund amounts. The current backlog of amended returns is about 20,000 higher than it was just over a year ago and roughly four times the level seen in 2019, before the pandemic disrupted normal operations.
Customer Service and Financial Implications
The IRS has also scaled back its customer service objectives, reducing its telephone service goal from 85 percent to 70 percent. This means the agency now aims to handle only seven out of every ten calls it receives. The slowdown in processing returns is expected to have substantial financial consequences. Federal regulations require the IRS to pay interest on refund amounts issued more than 45 days after the filing deadline. In 2025, this rule cost the agency over $2.6 billion. For the first quarter of 2026, the interest rate on late refunds stands at 7 percent, as reported by TurboTax.
Last year, the average taxpayer refund amounted to $3,167, highlighting the significant sums at stake for individuals awaiting these payments. The Treasury report underscores a department under considerable strain, with its pared-down workforce finding it increasingly difficult to keep pace with demand. As the tax season progresses, these systemic challenges could result in prolonged waiting periods for refunds, affecting household finances across the nation.
