Every year at the start of tax season, the question is whether the chronically underfunded IRS will be a hot mess or whether things will run fairly smoothly.
This year, the IRS expects about 164 million individual returns to be filed by the April 15 deadline.
Last year, before the Trump administration rolled back some gains, mainly staffing, things were looking better. About 104 million taxpayers received refunds, and those checks weren’t small, averaging $3,167.
“More recent filing seasons have demonstrated meaningful improvement,” National Taxpayer Advocate Erin Collins said in her annual report to Congress.
As for how the current season is looking, Collins is optimistic — and concerned.
“For the significant majority of taxpayers who file their returns electronically, who include their direct deposit information, and whose returns are not stopped by IRS processing filters, the process will be seamless,” she said.
However, “the success of the filing season will be defined by how well the IRS is able to assist the millions of taxpayers who experience problems,” she wrote.
And that could encompass millions of folks.
Let’s just walk through some of the challenges that Collins sees for this tax season.
Understaffing
The IRS started 2025 with about 102,000 employees and ended the year with about 74,000, a 27 percent reduction in “virtually all IRS functions, including Taxpayer Services,” Collins wrote.
Here’s an eye-popping observation from her report: “The IRS generally receives over 100 million telephone calls and several million pieces of taxpayer correspondence each year.”
Although some of those open positions will be backfilled, “the numbers will be smaller, and new hires generally need to be trained from scratch,” Collins wrote.
What a self-defeating move to cut customer service representatives who answer telephone calls and process taxpayer correspondence and casework.
My advice: File as soon as you can, triple-check all your math and pack an abundance of patience if you need to contact the IRS.
Refund delays
Last March, Trump issued an executive order calling on the federal government to reduce the number of paper checks it issues. As a result, refunds issued during the 2026 filing season will generally be delivered electronically as the IRS phases out paper checks, Collins said.
However, this big push to go all-digital might be a problem for many people who receive refunds but don’t have bank accounts.
“This transition is expected to disproportionately affect unbanked, underbanked, disabled, elderly, and other vulnerable taxpayers for whom paper checks have often been the only practical means of receiving refunds needed to cover basic living expenses,” Collins wrote.
About 5.6 million householdsdon’t have a checking or savings account, according to a 2023 Federal Deposit Insurance Corporation survey.
On paper (pun intended), that makes sense. It costs more to mail a check than to deliver it electronically. And Treasury checks are 16 times more likely to be lost, stolen, returned or altered than electronic payments, Collins pointed out in a blog post last year.
“Progress should not come at the expense of the most vulnerable among us,” Collins wrote. “For some taxpayers, paper checks are not just a matter of preference; they are the only option that respects their financial reality, geographic constraints, or religious convictions.”
If a filer doesn’t provide a direct deposit account, the IRS will send a letter requesting the information or an explanation for an exception.
“If there is no response to the notice and there are no other issues with the tax return, the refund will be released as a paper check after six weeks,” according to the IRS.
In an FAQ, the IRS said it will also provide alternative electronic payment methods, including payments via certain mobile apps and prepaid debit cards.
Fear of overdraft charges or high fees keeps some people from setting up accounts. But many banks and credit unions offer free checking with low or no minimum balance requirements.
My advice: If you know a friend or family member who doesn’t have a bank account, help them open one and switch to electronic payments for their paychecks and any government payments, including tax refunds. NerdWallet posted this week its list of the 10 best free checking accounts for 2026.
The One Big Beautiful Bill Act
The major tax overhaul under the Trump administration will likely create one big headache for the agency and taxpayers. This Republican-backed legislation made more than 100 changes to the tax code, according to Collins.
Some of the taxpayer-favorable deductions and benefits “are subject to complex eligibility rules, income thresholds, and phaseouts that will be difficult for many taxpayers to understand and for the IRS to administer accurately during the filing season,” she wrote.
For example, seniors get a new deduction, and there are tax breaks for tip income, overtime pay and auto loan interest. In the latter case, there’s a long list of requirements to deduct up to $10,000 a year in car loan interest: To qualify, your car must be new, not used; bought for personal use (no leases); and assembled in the U.S.
There’s more. The car loan must have been taken out after 2024 and obtained from a standard bank or lender — not from a family member. You also have to include the VIN on your tax return and make sure the vehicle weighs less than 14,000 pounds. The deduction, which applies to the 2025 tax year through 2028, begins to phase out once what the IRS calls “modified adjusted gross income” exceeds $100,000 if you’re filing single, and $200,000 for married couples filing jointly.
How likely is it that, between the staffing shortage at the IRS and the complicated new rules for various deductions, there won’t be a lot of confusion?
My advice: If you don’t want your return or refund held up, be sure you understand all the new rules for claiming any new deductions.
We would all love a “seamless” tax season. But with all these fresh hurdles, file early, triple-check everything, and pray you don’t actually have to call the IRS for help.
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