WASHINGTON, D.C. — National Taxpayer Advocate Erin M. Collins has released her Fiscal Year 2026 Objectives Report to Congress, praising the 2025 filing season for its efficiency while underscoring persistent challenges, including refund delays for identity theft victims and reduced staffing levels at the Internal Revenue Service (IRS). The report also offers recommendations to improve taxpayer services and modernize IRS operations in preparation for the 2026 filing season.
“The 2025 filing season was one of the most successful filing seasons in recent memory,” Collins stated, noting that the IRS received nearly 141 million individual income tax returns, of which about 138 million were processed. Over 95% of the processed returns were filed electronically, and 62% resulted in refunds. Despite this success, approximately 13 million returns were suspended for additional review, causing refund delays for impacted taxpayers.
Identity theft remains a critical concern. The IRS flagged about 2.1 million returns for potential identity theft, requiring taxpayers to authenticate their identities before receiving refunds. Cases referred to the Identity Theft Victim Assistance (IDTVA) unit, involving confirmed victims of identity theft, took an average of 20 months to resolve. As of the end of the filing season, there were 387,000 such cases in inventory. “IRS leadership has repeatedly assured TAS that reducing cycle time for IDTVA cases is a top priority, yet the cycle time remains unacceptably long,” Collins wrote. She recommended reducing the resolution time to four months, highlighting the disproportionate effect on low-income taxpayers.
A significant reduction in the IRS workforce adds to operational risks as the agency prepares for potential legislative changes and the upcoming filing season. Between January and June 2025, the IRS workforce decreased by 26%, with Information Technology staff reduced by 27% and Taxpayer Services staff reduced by 22%, or more than 9,000 employees. “With the 2026 filing season on the horizon amid potential legislation changes and continued staffing constraints,” Collins warned, “early preparation is essential to ensure the IRS can deliver both effective taxpayer service and secure operations.”
Collins emphasized the need for the IRS to prioritize three key technology initiatives as part of its modernization efforts. Among these are enhancing online accounts to allow taxpayers and professionals to perform all transactions digitally, digitizing the processing of paper-filed returns and correspondence to minimize delays, and integrating the approximately 60 case management systems currently in use. “For several decades, the holy grail of tax administration has been developing and deploying technology systems that automate key IRS functions in a way that improves taxpayer service and compliance and reduces the need for a large workforce,” she noted.
The IRS has agreed to implement 55% of the 77 administrative recommendations included in Collins’s 2024 year-end report. Collins praised recent progress in technology modernization but urged the agency to focus on initiatives that deliver the greatest value to taxpayers while mitigating risks during transitions.
The report underscores the importance of proactive measures and strategic priorities to ensure the IRS is well-positioned to manage taxpayer services and operations in the 2026 filing season.
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