A fiscal centerpiece of President Donald Trump’s agenda so far has been his pledge to lower taxes, and Americans are close to seeing healthy refunds from their 2026 filings. But actually seeing those returns show up on time might not be so straightforward, according to a recent federal watchdog report, largely owing to another of Trump’s signature policy stances.
The issues plaguing the agency “may affect the IRS’s ability to timely process tax returns during the filing season, especially with reduced staff,” according to the report. “This could result in delays in taxpayers receiving refunds.”
But because the IRS did not adjust withholdings before the law passed, most workers overpaid in taxes last year. That means many will be walking away with large returns this filing season, on paper at least.
That is, if the IRS can get those refunds out on time. The recent watchdog report painted a picture of an agency suffering from extreme understaffing and years of unprocessed claims since the pandemic. The report found that terminations had reduced headcount by 17% in key filing-season roles. Additionally, the inventory of backlogged claims has more than doubled since 2019 to 2 million items this year, impacting the agency’s ability to process new claims on time.
The record, 43-day government shutdown last fall furloughed IRS employees who had been working through that list of unprocessed items, and also affected the agency’s hiring plans. Most years, the IRS relies heavily on seasonal workers during tax season. But by the end of 2025, the agency had fully onboarded 50 of the 2,200 employees it had planned to hire, or just 2%. With the IRS generally requiring 60 to 80 days to train new employees, and tax season starting last week, the agency will have its work cut out for it this year.
