Latest news with #ErinCollins
Yahoo
07-07-2025
- Business
- Yahoo
Don't expect a speedy tax refund in 2026 from an understaffed IRS
The Trump administration's 2025 cost-cutting campaign at the IRS was all too successful, according to an internal watchdog report. As a result, the agency may struggle through the 2026 tax season. And taxpayers may suffer. The IRS lost 26% of its 102,000-person workforce to layoffs and buyouts this year through early June, amid a larger effort by the Trump administration to shrink the federal government. The figure comes in a June 25 report from Erin Collins, the national taxpayer advocate. The 2025 tax season ended as 'one of the most successful filing seasons in recent memory,' Collins said in a statement that accompanied the report. 'But with the IRS workforce reduced by 26%, 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.' The IRS processed 138 million returns in the 2025 filing season and issued 86 million refunds, with an average refund of $2,942. Few of the tax agency's critics predicted a successful 2025 tax season. The IRS went through five commissioners in four months, Collins writes in the report, 'and many of its most experienced leaders chose to accept one of the voluntary departure options.' Now comes a bigger challenge. A mammoth legislative package, approved by the Senate on July 1, includes dozens of tax cuts, tax-cut extensions and other tweaks to the tax code. The tax agency's Information Technology unit will have to reprogram IRS data systems to reflect those changes, if they become law. But that unit has lost 27% of its staff, Collins reports. The Taxpayer Services unit will have to handle the predicted deluge of telephone calls from befuddled taxpayers. That unit has lost 22% of its staff, more than 9,000 employees. To avoid potential chaos, according to a report summary, 'the IRS will need to rapidly hire and train thousands of new Taxpayer Services employees before the 2026 filing season to process returns and deliver timely refunds.' Other taxpayer advocates echoed those concerns. 'You can't make those kinds of deep cuts without harming customer service,' said David Kass, executive director of the nonprofit Americans for Tax Fairness. 'Let's be clear: This is a mistake of the administration's own making.' Collins made her remarks in a 75-page National Taxpayer Advocate Objectives Report to Congress. The report recommends several agency objectives. Among them: Create fully functional IRS online accounts. Right now, taxpayers 'generally cannot file tax returns, view most notices, or respond to notices through their online accounts,' according to the report summary. 'Until recently, they could not make payments. As a result, only about 10% of taxpayers have taken the time to establish online accounts.' Streamline taxpayer case management. Today, the IRS 'stores taxpayer data on about 60 distinct case management systems that generally cannot communicate with each other,' according to the report summary. When a taxpayer calls, IRS representatives often search through multiple systems to find their data, while the taxpayer waits on hold. The Trump administration set out to cut thousands of jobs at the IRS this year, aided by Elon Musk's Department of Government Efficiency, with an eye to saving money. Buyouts and layoffs, together, thinned the IRS workforce from 102,113 to 75,702, according to the advocate's report. The cuts, alone, would have posed a formidable challenge to the IRS as it ramps up for the 2026 tax season, agency observers say. But now, with the expected passage of Trump's tax bill, the smaller staff may have to cope with an onslaught of taxpayer inquiries about new rules on overtime, tips and car-loan interest. 'Now, maybe the cuts to staffing alone may not have had a huge impact on the filing season if all else held equal,' said Alex Muresianu, a senior policy analyst at the nonprofit Tax Foundation. 'But having the big staffing cuts the same year as a bunch of major tax changes is a dangerous mix.' One apparent casualty of the cuts is Direct File, a new IRS program that allowed millions of Americans with uncomplicated taxes to file returns at no cost. Piloted in a dozen states last year, Direct File expanded to 25 states in 2025. But now, the program may be over. The Trump tax bill would empanel a 'task force on the replacement of Direct File.' Perhaps the Direct File staff knew what was coming. In the first half of 2025, according to the advocate's report, the unit shrank from 27 employees to five. This article originally appeared on USA TODAY: 'Where's my refund?' Tax changes may bury understaffed IRS in 2026
Forbes
27-06-2025
- Business
- Forbes
Taxpayer Advocate Calls 2025 Filing Season A Success But Waves Warning Flag On Cuts
WASHINGTON, DC - OCTOBER 07: Erin M. Collins, National Taxpayer Advocate, Taxpayer Advocate Service testify's at the House Committee on Oversight and Reform on October 07, 2020 in Washington, DC. (Photo by) Getty Images In her introductory remarks to her Annual Report to Congress, Erin Collins, the National Taxpayer Advocate, touted IRS successes following the pandemic, suggesting that the most recent filing season was the 'smoothest yet.' For most Americans, she notes, the annual filing season is the only time they interact with the IRS—that makes it imperative for the IRS to get it right. Collins says that IRS employees did get it right this year, collecting approximately $5 trillion in revenue, processing around 180 million income tax returns, and over five billion information forms. Most taxpayers filed their returns, paid their taxes, or received their refunds without any delays or intervention from the IRS. That should happen when the system is working. Here's how that looked overall: Individual Tax Return Statistics Kelly Phillips Erb In addition, Collins says that there was 'meaningful progress' in improving telephone service. The IRS has met its 85% Level of Service (LOS) goal on its Accounts Management telephone lines for the last three filing seasons, including the current year. The "Level of Service" is the number you get when you divide the number of taxpayers who reach a live assistor by the number of calls the IRS system routes to live assistors. Phone service is just one piece of the taxpayer experience, which Collins says is driven by personnel and technology. Both are threatened under the new administration. Like the workforce at many federal agencies, Collins notes that the IRS workforce looks very different today than at the beginning of 2025. Notably, the number of employees has been reduced by over 25%. Here's how that breaks down: IRS Personnel Cuts Kelly Phillips Erb Cuts in personnel and the absence of consistent leadership have created 'significant challenges.' That's before the next round of cuts. The administration's budget proposes a 20% reduction in IRS funding next year and an overall reduction of 37% after accounting for the decrease in supplemental funding from the Inflation Reduction Act. Collins says that is likely to impact taxpayers and potentially the revenue collected. She recommends the current hiring freeze be lifted so that the IRS can hire essential filing season staff to meet taxpayer needs next year. This needs to happen by the end of summer, allowing time for onboarding and training by January. A successful filing season, Collins says, 'is not only an IRS imperative but also a national one.' With that, she revealed her Taxpayer Advocate Service (TAS) objectives for the year. TAS Objectives As required by law, the report also identifies TAS's key objectives for the upcoming fiscal year. The report outlines nine systemic advocacy objectives (what the TAS will advocate for with the IRS to enhance tax administration on behalf of taxpayers and address systemic issues that cause taxpayer burden, harm, or a negative impact on taxpayer rights). Here are a few highlights: Improve Automation & Metrics. For the 2025 fiscal year, the IRS estimated it would receive approximately 43 million paper tax returns and 19 million paper information returns, in addition to tens of millions of paper correspondence. Collins has consistently emphasized that paper is the IRS's 'kryptonite,' triggering delays in processing, increasing call volumes, and driving taxpayers to seek answers online or by phone. The IRS must prioritize processing automation, implement more accurate service metrics, and ensure its systems and processes support end-to-end digital processing and resolution to improve the overall taxpayer experience, she says. Expand Online Account Functionality. Taxpayers and tax professionals are looking for self-service options that offer convenience, speed, and accessibility. Collins says the IRS must continue to expand online account tools and digital services to include self-service options for taxpayers. Slash Identity‑Theft Case Timeframes. Tax-related identity theft continues to impact taxpayers. Identity theft victims rely on the IRS to investigate and resolve their identity theft issues before they can receive tax refunds, but there are still 'persistent delays. Despite increased attention to identity theft issues, Collins says the IRS has not made meaningful progress in reducing the case backlog or accelerating case resolution for victims. Case resolution times in fiscal year 2024 averaged two years to complete—in 2025, the average resolution time was about 602 days. Collins wants to see the average resolution time slashed from nearly 20 months to approximately four months. Enhance Oversight of Tax Return Preparers. Unethical tax return preparers—often non-credentialed—exploit taxpayers by promising large refunds through the manipulation of credits and deductions. Insufficient IRS oversight allows these unscrupulous preparers to operate with minimal accountability, writes Collins, who urged stronger oversight, clear communication, and targeted education for preparers. Speed Up CAF Number Suspensions. Authorized taxpayer representatives, including attorneys, certified public accountants, and enrolled agents, serve as advocates for taxpayers. When the IRS suspects that a practitioner has been a victim of fraud, it can suspend their Centralized Authorization File (CAF) number during the investigation (a CAF number is a unique nine-digit identification number assigned to tax professionals and others who file third-party authorizations and allows them to communicate with the IRS on behalf of their clients). Cutting off that access to the IRS harms taxpayers while the IRS investigates. Collins suggests that by issuing interim CAF numbers, improving communication, and reviewing current policies with stakeholder input, the IRS can better strike a balance between fraud prevention and taxpayer rights. Complete ERC Claims Processing. The Employee Retention Credit (ERC) is a refundable tax credit designed to provide financial relief to businesses who kept employees on their payroll during the pandemic. Since the credit became available, the IRS received nearly five million ERC claims, and has either disallowed, reversed, or recaptured approximately 214,000 of these—in addition to imposing a moratorium on claims to stave off the fraud. Collins says IRS must focus on resolving claims efficiently, providing clear and timely communication, addressing responses to the claim disallowances, and safeguarding taxpayer rights. Improve FOIA Request Handling. The Freedom of Information Act (FOIA) allows individuals to request access to documents that the IRS possesses, including administrative files related to taxpayer returns or claims. Taxpayers and tax professionals continue to report ongoing issues with FOIA responses, including lengthy delays, incomplete records, and excessive redactions. Collins suggests modernizing the FOIA processes, reducing processing times, and enhancing guidance for staff. Strengthen Appeals Independence & Efficiency. The IRS's Independent Office of Appeals' mission is to safeguard taxpayer rights by independently and efficiently resolving federal tax disputes, minimizing the need for costly and lengthy litigation. Collins says the IRS should adopt targeted reforms aimed at rebuilding taxpayer trust and safeguarding their rights. Improve Criminal Voluntary Disclosure. The IRS's Criminal Voluntary Disclosure Practice offers taxpayers with potential criminal tax exposure a critical opportunity to self-correct and return to compliance. In return, the IRS gains revenue, closes part of the tax gap, and promotes future compliance. The Advocate recommends that the IRS engage with stakeholders to improve the program's design and simplify the application process, making it more understandable, user-friendly, and transparent. About The Report The report is one of two that the NTA delivers to Congress each year—one in January and another in June. The NTA leads the Taxpayer Advocate Service (TAS) and delivers the reports to the Senate Finance Committee and the House Ways and Means Committee. Since TAS is an independent organization within the IRS, there is no prior review or comment from the IRS Commissioner, the IRS Oversight Board, the Treasury Secretary, any Treasury officer or employee, or the Office of Management and Budget. You can read the 2026 report here. About TAS While it feels like the TAS has been around forever, that's not the case. An early version of the organization emerged in 1979, following the IRS's creation of the Office of the Taxpayer Ombudsman, which was established to serve as the primary advocate within the IRS for taxpayers. That office was eventually codified in the Technical and Miscellaneous Revenue Act of 1988—section 7811 of the tax code granted the Ombudsman the statutory authority to issue Taxpayer Assistance Orders (TAOs) when taxpayers were suffering or about to suffer significant hardships. The law also directed the Ombudsman and the Assistant Commissioner (Taxpayer Services) of the IRS to provide an annual report to Congress on the quality of the IRS's taxpayer services. Nearly a decade later, in 1996, Congress officially replaced the Ombudsman with the Office of the Taxpayer Advocate, considered the 'voice of the taxpayer.' At the same time, Congress granted the Advocate the authority and responsibility to inform Congress of recurring, unresolved problems and difficulties that taxpayers encounter in dealing with the IRS. The new law also tasked the Advocate with bringing two annual reports to Congress. Those reports are due June 30 (objectives of the Taxpayer Advocate for the coming fiscal year) and December 31 (includes a summary of at least 20 of the Most Serious Problems facing taxpayers) of each year. Today, there is at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico. Forbes House Advances Bills Including Fixes For Disaster Deadlines And Stolen Tax Refund Checks By Kelly Phillips Erb Forbes Under Trump, IRS Has Shed More Than 11% Of Its Workforce. More Cuts Are On The Way By Kelly Phillips Erb Forbes A Guide To The Tax Cuts In (And Out) Of Trump's 'Big, Beautiful Bill' By Kelly Phillips Erb
Newsweek
26-06-2025
- 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.
Chicago Tribune
28-01-2025
- Business
- Chicago Tribune
Chesterton expands its TIF district to help pay for capital improvement projects
Chesterton is expanding the boundaries of its Tax Increment Financing district as the funds will be used to help finance a number of capital improvement projects. One of the major initiatives is remodeling Chesterton's fire station, which will include a two-story, 2,000-square-foot addition along with a reconfiguration of offices and sleeping quarters. The fire station and Town Hall remodeling are expected to cost around $2.8 million. The town along with a consulting firm is working on a breakdown of projected costs for the Town Hall and fire station portions of the building at 8th Street and Broadway. Chesterton's Redevelopment Commission on Monday before the council meeting gave its final approval to the new TIF district boundaries that include 300 new industrial and business parcels. The district now will go west on Broadway from Calumet Road to 16th Street. Properties south of Broadway would include the new Duneland YMCA Healthy Living Campus being developed on the old Chesterton Middle School site. The new TIF will also stretch south along Calumet Road, north of the U.S. Post Office. North of Broadway, the new district would take in some properties on Woodlawn Avenue and Locust Street before ending at Calumet Road and Indian Boundary Road. Residential properties aren't included in the TIF area. TIF districts allow the town to divert a portion of collected property taxes from a parcel to help pay for capital improvement projects. The town of Chesterton has about $10 million available in diverted taxes from its original TIF district that was established in 2000. That district mostly lies east of Calumet Road and is bounded to the north by Indian Boundary Road and the Indiana Toll Road to the south. The new TIF boundaries allow the town to use funds for the fire station and Councilwoman Erin Collins, D-2nd, said that's the financial plan. The Town Council during its meeting Monday touched on two other projects that will involve the use of TIF funds. Bids were opened for the paving and improvement of two new downtown parking lots in the 100 block of Grant Avenue and Calumet Road, and the 100 block of Indiana Avenue. There were four bidders with Grimmer Construction Inc. of Highland submitting the apparent lowest bid of $1,269,149. A contract will be awarded after all the bids are analyzed. The Town Council also unanimously approved an offer of $377,500 to buy the property of Duneland Collision at 107 N. 15th St. If an agreement is reached, the town would use TIF funds to convert the property into a vehicle compound for the street and police departments. Another possible use of TIF funds would be to make infrastructure improvements around the new Duneland Y being developed at the Chesterton Middle School site. Councilwoman Jennifer Fisher, I-Dist. 5, acknowledged to the Post-Tribune that there have been some planning discussions between town and Duneland Y officials, but nothing has been settled. In other business, the council voted 4-1 to re-examine the town's options concerning its contract for legal services. The Harris, Welsh & Lukmann firm has been used by the town for at least 40 years. Chuck Lukmann has been the town attorney with other members of the firm attending meetings and doing legal work. Fisher said that the town's legal costs had been high last year and there is a need to explore options. She and other council members emphasized that they are satisfied with the legal work performed and hope that Harris, Welsh & Lukmann would be among those interested in a contract with the town. Councilman James Ton, R-Dist. 1, said he was 'not astounded that the bill for 2024 was a little higher.' Ton said that the town called upon the firm to do more legal work than normal. Among the projects the law firm worked on were land acquisition for the Westchester-Liberty Trail and downtown parking lots, the situation concerning a data center proposal and the new police station. Collins said that for her, the concern was the town paying $362,000 for legal services 'was more than we can afford and more than we should be paying.'
