Watchdog warns of challenges as IRS handles first tax season after Trump staffing cuts

The IRS is facing its first tax season since the Trump administration implemented workforce reductions across the agency, and the Government Accountability Office warned in a report Monday that the instability could hamper service performance. 

Based on a December 2025 internal IRS report, according to GAO, agency managers flagged that staffing gaps as well as challenges implementing changes to the tax code mandated by the 2025 One Big Beautiful Bill Act posed the biggest risks to a successful filing season, which runs from Jan. 26 through April 15. 

“IRS also found that the [43-day fall government] shutdown led to hiring delays and compressed timelines to onboard and train new staff,” investigators wrote. “As a result, IRS concluded return processing, customer service and other functions would enter filing season undertrained or understaffed, which could lead to processing errors and poor customer service and ultimately harm taxpayers.”

While voluntary separation incentives like the deferred resignation program and early retirement offers, which resulted in the majority of IRS’ roughly 26,100 separations, began during the 2025 tax season, many participating employees did not begin their paid leave until after April. As such, last year’s filing period was largely unaffected by the workforce changes.  

Still, GAO found that these separations contributed to an increase in the average number of days (27 to 36) it took IRS to process paper returns after the end of 2025’s tax season compared with after 2024’s filing period. 

“IRS officials said that staff separations in 2025, which included more tenured employees who had more experience processing paper returns, contributed to the much higher processing time post-filing season,” investigators wrote. 

GAO also criticized IRS’ 2025 workforce cuts for being “not targeted or strategic.” The auditors noted, for example, that in July 2025 officials began allowing employees to rescind their participation in the deferred resignation program in order to “fill critical vacancies.” Additionally, investigators reported that the agency in fiscal 2026 has rehired some employees who had left the agency through deferred resignation or early retirement.

The report also flagged several consequences of the federal hiring freeze on IRS performance in 2025 including:  

• Officials said that the agency may have been able to meet its goal to process paper returns in an average of 13 days or less if not for the hiring pause. However, the IRS did perform better in this area than in 2024. 
• Use of overtime to process returns increased by 38% between 2024 and 2025, which officials said was primarily due to them being unable to meet hiring targets. (GAO has previously reported that the IRS relies too much on overtime.) 
• The agency was able to fully staff fewer taxpayer assistance centers that provide in-person service in 2025 compared with 2024, in part, due to the freeze. 

GAO recommended that the IRS create an implementation team to oversee the agency’s workforce overhauls and that leaders address staffing losses as part of the IRS strategic workforce plan, which is under development. In response to a draft of the report, agency officials did not express agreement or disagreement with the recommendations but said they would share details after the report is finalized. 

Frank Bisignano, the head of the Social Security Administration and de facto leader of the IRS, testified before Congress earlier this month that he “feels good” about the IRS' current staffing level, while acknowledging that there hasn’t been any assessment of the workforce’s effectiveness post-reductions. 

The inspector general for the IRS and National Taxpayer Advocate have also raised concerns with the agency’s preparedness for the 2026 tax season, citing reduced staffing. 

Government Executive reported in February that the IRS has transferred human resources and IT staffers to handle tax returns and customer service.