IRS did better than expected on refunds despite job cuts: Watchdog

Business IRS did better than expected on refunds despite job cuts: Watchdog Comments: by Max Rego - 06/24/26 4:59 PM ET Comments: Link copied by Max Rego - 06/24/26 4:59 PM ET Comments: Link copied

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The Internal Revenue Service (IRS) performed “better than expected” on issuing refunds to taxpayers this year, the agency’s independent watchdog said Wednesday.

A report to Congress from Erin Collins, the national taxpayer advocate, noted the “vast majority of taxpayers” successfully filed their returns and received their refunds “without significant delay.” During the 2026 filing season, the IRS processed nearly 139 million individual returns and issued more than 90 million refunds, according to Collins.

“Entering the 2026 filing season, there was considerable uncertainty about the IRS’s ability to successfully manage a convergence of major challenges: implementation of sweeping new tax legislation, significant workforce reductions, and extensive leadership turnover,” she wrote. “In the end, the IRS performed better than expected in most respects.”

In January, Collins warned the IRS that cutting more than 27 percent of its workforce over the prior year could hinder its performance in the ongoing filing season.

The service had more than 102,000 employees as of January 2025, but its workforce shrunk to less than 75,000 as of December, Collins said at the time. That reduction came after the Elon Musk-led Department of Government Efficiency targeted it in the early months of the second Trump administration.

The taxpayer advocate’s Wednesday report said the IRS delivered 98 percent of refunds via direct deposit, resulting in the majority of taxpayers receiving them without delay. Collins also credited the IRS for “improving its technology year by year,” highlighting the service’s “Where’s My Refund” tracker as reducing the need for taxpayers to call the agency or visit an assistance center.

The average refund this filing cycle was $3,275, according to the report, marking an increase from last year’s average of $3,230. Taxpayers receiving refunds via direct deposit, meanwhile, historically get more money on average.

The One Big Beautiful Bill Act, which President Trump signed into law last July, added multiple new deduction opportunities for filers.

In January, Collins said implementing the law could pose issues for the IRS this filing season. However, her Wednesday report said the agency implemented those changes successfully.

Yet despite her generally positive assessment of the IRS’s performance, Collins noted the filing season was still “frustrating, confusing, and financially disruptive” for “millions” of taxpayers.

She said taxpayers spent an average of 14 minutes on hold this filing season, an increase of six minutes from 2025 — despite the total number of calls decreasing by roughly 2.1 million.

Collins said earlier this year the IRS employed 22 percent fewer customer service employees in December than it did in January 2025, with its new hires in that area having less experience than employees who left.

The taxpayer advocate also wrote of taxpayers having issues obtaining refunds via paper checks and low- and middle-income taxpayers waiting up to 20 months for refunds due to identity theft.

“As the IRS continues to transform its operations, it must preserve meaningful access to telephone assistance, in-person service, clear notices, timely correspondence, and effective case resolution functions,” Collins wrote.

“Taxpayers must be able to understand what is expected of them, obtain help when they need it, and trust they will be treated fairly when problems arise,” she added. “Those principles are fundamental to taxpayer rights and essential to maintaining public confidence in our tax system.”

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