The IRS delivered a smooth filing season in 2025, but according to the National Taxpayer Advocate’s newly released 2025 Annual Report to Congress, the road ahead may be more complicated.
In 2025, the IRS handled over 165 million individual tax returns, mostly electronically, and while most refunds went out on time, many people faced major delays, especially those who filed on paper or were victims of identity theft. Routine refunds took weeks, but identity theft cases dragged on for nearly two years, causing serious financial stress. The National Taxpayer Advocate called the delays unacceptable and urged the IRS to assign dedicated staff to identity theft cases until processing time is cut to 90 days.
There have been challenges during the 2026 filing season for not only the taxpayers, but the IRS as well, including the following:
- The IRS had a 27% reduction in their staffing in 2025, majority being the customer service representatives who answer over 100 million calls and process millions of taxpayers’ correspondence.
- The One Big Beautiful Bill Act made more than 100 changes to the tax code. Even though the changes help taxpayers, the rules are complicated, which makes them hard for people to understand and tough for the IRS to handle during an already busy season.
The report identifies several serious issues that may affect taxpayers, including the following:
- The IRS is super slow at processing amended returns, sometimes more than a year for businesses and several months for individuals, which is difficult since people often need that money to pay bills. On top of that, when refunds get denied, the notices are often confusing and don’t clearly explain deadlines, which can cause taxpayers to miss out on their refund. Overall, the IRS needs to move faster and communicate better.
- Since the IRS is still using paper, it is slowing everything down and causing unnecessary errors. Even though they’ve been trying to modernize for years, their outdated system is still getting in the way.
- The IRS gets tons of phone calls, but they don’t really measure whether callers get their problems solved. They’re not tracking most calls or what comes out of them, and the new voicebots aren’t helping much.
The National Taxpayer Advocate’s 2026 Purple Book includes 71 suggestions to improve how the IRS works and protects taxpayers. Here are some of the big ones:
- Most tax returns are done by paid preparers, but many aren’t tested or licensed, so the report says Congress should let the IRS set basic standards and eliminate the ones with too many errors.
- Refund cases should be allowed in Tax Court too, since right now you can only go there if you owe money, but getting a refund means suing in a more costly, complicated court.
- The report recommends expanding support for Low Income Taxpayer Clinics—which help low-income and non-English-speaking taxpayers with IRS problems—by removing funding caps and lowering the required funding match so the program can grow.
- The report says the IRS should be forced to handle refund claims within a year, since right now taxpayers can wait forever with no response.
- Allow taxpayers to claim the Child Tax Credit and Earned Income Tax Credit for a child who meets all requirements-even if the SSN is delayed
- The report wants disaster tax relief to be consistent and automatic, instead of being different every time and usually showing up too late.
