The IRS is expected to maintain its performance with fewer staff, less consistent leadership, and a disrupted way of working. Officially, things appear steady, but in reality, the agency is under strain.
The 2026 filing season looks stable at first glance. However, these numbers only show early processing, not how the system handles pressure. The real challenges appear later, when errors and backlogs build up.
The Event
In the last two years, IRS modernization funding fell from $80 billion to $26 billion. Of that, $15.7 billion is already spent. The rest now partly covers basic operations instead of long-term upgrades.
During this period, the IRS lost about a quarter of its staff, dropping from around 101,000 employees to 72,000. The biggest losses were in taxpayer services and compliance.
As a result, about 1,500 IT and HR employees were moved to process tax returns, which is not their usual job. Training for these new roles started only after the filing season was underway.
The IRS also m…
