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Newsweek
6 days ago
- Business
- Newsweek
IRS Warning Issued for 2026 Taxes
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Taxpayers could face significant hurdles during the 2026 tax filing season after the Internal Revenue Service (IRS) reduced its workforce by more than one-quarter in the past year, according to a new report delivered to Congress. National Taxpayer Advocate Erin Collins issued the warning on Wednesday, citing figures that show that the IRS employee headcount dropped by more than 25,000, marking the first official estimate of job losses tied to staffing initiatives under President Donald Trump's second administration. The House's "One Big, Beautiful Bill," expected before July 4, could create new complexities for the IRS, the report added. Key provisions retroactively apply to the 2025 tax year, such as disallowing Employee Retention Credit claims after January 31, 2024. The changes would require fast updates to tax forms and systems, increasing pressure on the agency's reduced staff. Erin Collins, national taxpayer advocate, speaks during a Financial Services and General Government Subcommittee hearing on "Internal Revenue Service: Narrowing the Tax Gap and Improving Taxpayer Services," on May 19, 2021, on Capitol Hill in... Erin Collins, national taxpayer advocate, speaks during a Financial Services and General Government Subcommittee hearing on "Internal Revenue Service: Narrowing the Tax Gap and Improving Taxpayer Services," on May 19, 2021, on Capitol Hill in Washington. MoreWhy It Matters The reduction of 26 percent of the IRS workforce comes as the agency prepares for new, complex tax law changes anticipated in congressional budget negotiations. Substantial staff losses and the prospect of a 20 percent reduction in the IRS budget, plus retroactive legislative changes, raise concerns about the agency's ability to process returns efficiently and deliver refunds, potentially affecting tens of millions of U.S. households and the federal government's ability to collect revenue. What To Know The IRS headcount dropped from 102,113 to 75,702 employees as of June. More than 17,500 employees accepted buyouts under the "deferred resignation program." The Trump administration's budget proposal features an additional 20 percent funding reduction for the IRS. Accounting for stripped Inflation Reduction Act supplemental funds, that represents a 37 percent budget cut compared to the previous year, the Associated Press reported. Collins wrote that "a reduction of that magnitude is likely to impact taxpayers and potentially the revenue collected." More than 80 million Americans will get tax rebates worth $2,942 on average following the 2025 filing season, the Internal Revenue Service (IRS) has said. Individual Returns Received: 140,633,000 Individual Returns Processed:138,057,000 Refunds Issued: 86,021,000 Average Refund Amount: $2,942 Refunds Issued by Direct Deposit: 81,032,000 Although Collins described the 2025 filing season as "one of the most successful filing seasons in recent memory," she warned that the IRS risks being unprepared for 2026 as a result of its reduced workforce and impending tax law changes. Collins said. "With the IRS workforce reduced by 26 percent and significant tax law changes on the horizon, there are risks to next year's filing season. It is critical that the IRS begin to take steps now to prepare," she said. Collins warned that without improved technology, IRS staffing cuts could jeopardize the success of next year's filing season She noted that important steps—such as hiring and training thousands of new seasonal and permanent staff—had not yet begun as of mid-2025. Where IRS Staffing Cuts Hit Hardest The cuts, which also resulted from a "deferred resignation program" linked to Elon Musk's Department of Government Efficiency, have particularly impacted taxpayer services, small business/self-employed divisions, and information technology teams, the tax watchdog's breakdown said. The IRS continued to struggle with an identity-theft backlog, with 387,000 unresolved cases as of June. On average, it took nearly 20 months to resolve a single case, marginally improving on previous performance. Collins called this "unacceptably long," warning that it disproportionately affects victims who rely on tax refunds for everyday expenses. What Happens Next The IRS must quickly hire and train thousands of employees and adapt its IT systems to manage new tax law requirements before 2026. The Treasury Department has requested $852 million to fund the efforts. Congressional actions on tax legislation and IRS budget proposals—expected before July 4—will determine the scale of changes and challenges for the next tax season. This article used reporting by The Associated Press.
Qatar Tribune
7 days ago
- Business
- Qatar Tribune
Trump budget & DOGE cuts raise alarms for 2026 tax season
Agencies The budget bill championed by President Donald Trump could complicate next year's tax filing season after the IRS lost one-quarter of its employees through staffing cuts, an independent watchdog reported Wednesday. The IRS workforce has fallen from 102,113 workers to 75,702 over the past year, according to the latest National Taxpayer Advocate report to Congress. The report Wednesday offered the first official numbers on the IRS job losses associated with Elon Musk's Department of Government Efficiency. Most of the employees took the 'fork in the road' resignation offer from DOGE rather than waiting to get laid off. Some of the findings from the report: The Trump administration's efforts to shrink the size of the federal bureaucracy to a mass exodus of probationary employees who had not yet gained civil service protections and were offered buyouts through a 'deferred resignation program.' More than 17,500 IRS workers took that route. The biggest cuts were in taxpayer services, the small business/self-employed office and information technology. The report noted that the Republican administration's proposed budget includes a 20% reduction in IRS funding next year. That's a 37% reduction when taking into account the supplemental funding in the Biden-era Inflation Reduction Act that Republicans previously stripped away. 'A reduction of that magnitude is likely to impact taxpayers and potentially the revenue collected,' wrote Erin M. Collins, who leads the organization assigned to protect taxpayers' said the 2025 filing season was 'one of the most successful filing seasons in recent memory,' though she warned that the 2026 season could be rocky. 'With the IRS workforce reduced by 26% and significant tax law changes on the horizon, there are risks to next year's filing season,' Collins wrote. 'It is critical that the IRS begin to take steps now to prepare.' She said that, halfway through the year, there were concerns that the IRS had not yet undertaken key preparation steps, including hiring and training seasonal and permanent employees. The report warned about the possibility of understaffing to manage new provisions from Trump's legislative package if it's enacted. 'Several provisions will retroactively affect the 2025 tax year, thus impacting millions of taxpayers and requiring the IRS to quickly update tax year 2025 tax forms and programming for the 2026 filing season,' the report said. Specifically, the House bill retroactively prohibits the IRS from allowing or making payment of Employee Retention Credit claims filed after Jan. 31, 2024. The report also said the IRS historically receives more calls in years following significant changes in tax law, so it may need additional employees and improved digital tools to maintain its level of service. The IRS is dealing with delays in resolving self-reported identity theft victim assistance cases — taking up to 20 months to resolve, the report said. As of the end of the 2025 filing season, the IRS was handling about 387,000 of these cases. That is a slight improvement from the more than 22 months it took to resolve identity theft cases, as noted in last year's report, which outlined roughly 500,000 unresolved cases in its inventory. 'The cycle time remains unacceptably long,' Collins said. 'I continue to urge the agency to focus on dramatically shortening the time it takes' to resolved identity theft cases, 'so it does not force victims, particularly those dependent on their tax refunds, to wait nearly two years to receive their money.'
25-06-2025
- Business
Trump's budget bill could complicate 2026 tax filing season after IRS cuts, watchdog warns
WASHINGTON -- The budget bill championed by President Donald Trump could complicate next year's tax filing season after the IRS lost one-quarter of its employees through staffing cuts, an independent watchdog reported Wednesday. The IRS workforce has fallen from 102,113 workers to 75,702 over the past year, according to the latest National Taxpayer Advocate report to Congress. The report Wednesday offered the first official numbers on the IRS job losses associated with Elon Musk's Department of Government Efficiency. Most of the employees took the 'fork in the road" resignation offer from DOGE rather than waiting to get laid off. Some of the findings from the report: The Trump administration's efforts to shrink the size of the federal bureaucracy to a mass exodus of probationary employees who had not yet gained civil service protections and were offered buyouts through a 'deferred resignation program.' More than 17,500 IRS workers took that route. The biggest cuts were in taxpayer services, the small business/self-employed office and information technology. The report noted that the Republican administration's proposed budget includes a 20% reduction in IRS funding next year. That's a 37% reduction when taking into account the supplemental funding in the Biden-era Inflation Reduction Act that Republicans previously stripped away. 'A reduction of that magnitude is likely to impact taxpayers and potentially the revenue collected," wrote Erin M. Collins, who leads the organization assigned to protect taxpayers' rights. Collins said the 2025 filing season was 'one of the most successful filing seasons in recent memory,' though she warned that the 2026 season could be rocky. 'With the IRS workforce reduced by 26% and significant tax law changes on the horizon, there are risks to next year's filing season,' Collins wrote. "It is critical that the IRS begin to take steps now to prepare.' She said that, halfway through the year, there were concerns that the IRS had not yet undertaken key preparation steps, including hiring and training seasonal and permanent employees. The report warned about the possibility of understaffing to manage new provisions from Trump's legislative package if it's enacted. 'Several provisions will retroactively affect the 2025 tax year, thus impacting millions of taxpayers and requiring the IRS to quickly update tax year 2025 tax forms and programming for the 2026 filing season," the report said. Specifically, the House bill retroactively prohibits the IRS from allowing or making payment of Employee Retention Credit claims filed after Jan. 31, 2024. The report also said the IRS historically receives more calls in years following significant changes in tax law, so it may need additional employees and improved digital tools to maintain its level of service. The IRS is dealing with delays in resolving self-reported identity theft victim assistance cases — taking up to 20 months to resolve, the report said. As of the end of the 2025 filing season, the IRS was handling about 387,000 of these cases. That is a slight improvement from the more than 22 months it took to resolve identity theft cases, as noted in last year's report, which outlined roughly 500,000 unresolved cases in its inventory. 'The cycle time remains unacceptably long," Collins said. 'I continue to urge the agency to focus on dramatically shortening the time it takes' to resolved identity theft cases, "so it does not force victims, particularly those dependent on their tax refunds, to wait nearly two years to receive their money.'
Boston Globe
25-06-2025
- Business
- Boston Globe
Trump's budget bill could complicate 2026 tax filing season after IRS cuts, watchdog warns
Some of the findings from the report: Taxpayers will likely see effects of staffing reductions The Trump administration's efforts to shrink the size of the federal bureaucracy to a mass exodus of probationary employees who had not yet gained civil service protections and were offered buyouts through a 'deferred resignation program.' More than 17,500 IRS workers took that route. The biggest cuts were in taxpayer services, the small business/self-employed office and information technology. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up The report noted that the Republican administration's proposed budget includes a 20 percent reduction in IRS funding next year. That's a 37 percent reduction when taking into account the supplemental funding in the Biden-era Inflation Reduction Act that Republicans previously stripped away. Advertisement 'A reduction of that magnitude is likely to impact taxpayers and potentially the revenue collected,' wrote Erin M. Collins, who leads the organization assigned to protect taxpayers' rights. The 2026 tax season could be precarious Collins said the 2025 filing season was 'one of the most successful filing seasons in recent memory,' though she warned that the 2026 season could be rocky. Advertisement 'With the IRS workforce reduced by 26 percent and significant tax law changes on the horizon, there are risks to next year's filing season,' Collins wrote. 'It is critical that the IRS begin to take steps now to prepare.' She said that, halfway through the year, there were concerns that the IRS had not yet undertaken key preparation steps, including hiring and training seasonal and permanent employees. Trump's package could add new layer of problems The report warned about the possibility of understaffing to manage new provisions from Trump's legislative package if it's enacted. 'Several provisions will retroactively affect the 2025 tax year, thus impacting millions of taxpayers and requiring the IRS to quickly update tax year 2025 tax forms and programming for the 2026 filing season,' the report said. Specifically, the House bill retroactively prohibits the IRS from allowing or making payment of Employee Retention Credit claims filed after Jan. 31, 2024. The report also said the IRS historically receives more calls in years following significant changes in tax law, so it may need additional employees and improved digital tools to maintain its level of service. Identity theft cases are still piling up The IRS is dealing with delays in resolving self-reported identity theft victim assistance cases — taking up to 20 months to resolve, the report said. As of the end of the 2025 filing season, the IRS was handling about 387,000 of these cases. That is a slight improvement from the more than 22 months it took to resolve identity theft cases, as noted in last year's report, which outlined roughly 500,000 unresolved cases in its inventory. 'The cycle time remains unacceptably long,' Collins said. 'I continue to urge the agency to focus on dramatically shortening the time it takes' to resolved identity theft cases, 'so it does not force victims, particularly those dependent on their tax refunds, to wait nearly two years to receive their money.' Advertisement
Winnipeg Free Press
25-06-2025
- Business
- Winnipeg Free Press
Trump's budget bill could complicate 2026 tax filing season after IRS cuts, watchdog warns
WASHINGTON (AP) — The budget bill championed by President Donald Trump could complicate next year's tax filing season after the IRS lost one-quarter of its employees through staffing cuts, an independent watchdog reported Wednesday. The IRS workforce has fallen from 102,113 workers to 75,702 over the past year, according to the latest National Taxpayer Advocate report to Congress. The report Wednesday offered the first official numbers on the IRS job losses associated with Elon Musk's Department of Government Efficiency. Most of the employees took the 'fork in the road' resignation offer from DOGE rather than waiting to get laid off. Some of the findings from the report: Taxpayers will likely see effects of staffing reductions The Trump administration's efforts to shrink the size of the federal bureaucracy to a mass exodus of probationary employees who had not yet gained civil service protections and were offered buyouts through a 'deferred resignation program.' More than 17,500 IRS workers took that route. The biggest cuts were in taxpayer services, the small business/self-employed office and information technology. The report noted that the Republican administration's proposed budget includes a 20% reduction in IRS funding next year. That's a 37% reduction when taking into account the supplemental funding in the Biden-era Inflation Reduction Act that Republicans previously stripped away. 'A reduction of that magnitude is likely to impact taxpayers and potentially the revenue collected,' wrote Erin M. Collins, who leads the organization assigned to protect taxpayers' rights. The 2026 tax season could be precarious Collins said the 2025 filing season was 'one of the most successful filing seasons in recent memory,' though she warned that the 2026 season could be rocky. 'With the IRS workforce reduced by 26% and significant tax law changes on the horizon, there are risks to next year's filing season,' Collins wrote. 'It is critical that the IRS begin to take steps now to prepare.' She said that, halfway through the year, there were concerns that the IRS had not yet undertaken key preparation steps, including hiring and training seasonal and permanent employees. Trump's package could add new layer of problems The report warned about the possibility of understaffing to manage new provisions from Trump's legislative package if it's enacted. 'Several provisions will retroactively affect the 2025 tax year, thus impacting millions of taxpayers and requiring the IRS to quickly update tax year 2025 tax forms and programming for the 2026 filing season,' the report said. Specifically, the House bill retroactively prohibits the IRS from allowing or making payment of Employee Retention Credit claims filed after Jan. 31, 2024. The report also said the IRS historically receives more calls in years following significant changes in tax law, so it may need additional employees and improved digital tools to maintain its level of service. Monday Mornings The latest local business news and a lookahead to the coming week. Identity theft cases are still piling up The IRS is dealing with delays in resolving self-reported identity theft victim assistance cases — taking up to 20 months to resolve, the report said. As of the end of the 2025 filing season, the IRS was handling about 387,000 of these cases. That is a slight improvement from the more than 22 months it took to resolve identity theft cases, as noted in last year's report, which outlined roughly 500,000 unresolved cases in its inventory. 'The cycle time remains unacceptably long,' Collins said. 'I continue to urge the agency to focus on dramatically shortening the time it takes' to resolved identity theft cases, 'so it does not force victims, particularly those dependent on their tax refunds, to wait nearly two years to receive their money.'
