logo
Don't expect a speedy tax refund in 2026 from an understaffed IRS

Don't expect a speedy tax refund in 2026 from an understaffed IRS

USA Today03-07-2025
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.'
Tax changes in Trump bill could swamp understaffed IRS
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.'
Taxpayer Advocate: IRS needs fully functional online accounts
Collins made her remarks in a 75-page National Taxpayer Advocate Objectives Report to Congress. The report recommends several agency objectives. Among them:
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.'
Is Direct File on the way out?
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.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Why This Market Dip Is Your Chance to Accelerate Product Velocity, Win Customers and Own the Next Cycle
Why This Market Dip Is Your Chance to Accelerate Product Velocity, Win Customers and Own the Next Cycle

Entrepreneur

time35 minutes ago

  • Entrepreneur

Why This Market Dip Is Your Chance to Accelerate Product Velocity, Win Customers and Own the Next Cycle

When markets go quiet and headlines fade, the founders who keep building, shipping, and listening are the ones who will be ready when the next bull run erupts without warning. Opinions expressed by Entrepreneur contributors are their own. Crypto volumes have plunged from a post-Trump election surge of $126 billion to a mere $35 billion. Tech stocks remain sluggish compared to their former highs, even as the dollar hits a decade low. Venture capital feels like it's collectively holding its breath, with top Silicon Valley firms pivoting their business models. This isn't a collapse — far from it. It's a rare, fragile pause. A "wait and see" moment of equilibrium that, like all market pauses, likely won't last. Behind the headlines, a far bigger story is unfolding. The United States and China have quietly reopened high-level trade talks aimed at easing the tensions that have defined the past five years of decoupling and protectionism. According to Bloomberg, these negotiations are among the most serious since Trump-era tariffs began reshaping global supply chains. At the same time, China is reportedly loosening capital controls and courting global investors again, which suggests Beijing views the current economic stall as too risky to endure. If these talks produce breakthroughs — whether tariff rollbacks, a tech export détente or coordinated policy resets — investors can expect a market reaction not seen since early 2021. In short, this stillness may be the calm before the next global bull run. When capital floods back into high-growth sectors, it will do so suddenly and violently. Founders should see this moment for what it is: a gift. The quiet between cycles is the rarest and most valuable time to build. Attention is cheap. Competition is minimal. Customers are more accessible. And though investors seem quiet, they're watching closely for the teams that stayed focused while others lost steam. Related: Today's Biggest Companies Are Acting Like VCs. Here's Why Startup Founders Need to Pay Attention. For startup founders, the single most important mandate now is to increase velocity. This doesn't mean grinding longer hours or chasing a vague idea of "hustle." It means removing friction from your product cycle and delivering tangible features or updates to users every week. If your roadmap is quarterly, break it down into weekly shippable blocks. Tools like Linear and Notion help teams stay aligned without heavy process overhead. For UI or user-facing experiments, Figma remains one of the fastest ways to move from idea to prototype without slowing development. Founders must get hands-on with their products and focus on delivering value to power users. Equally critical is user proximity. It's easy to skip customer conversations when fundraising is tough and feature velocity slows, but that's exactly when listening matters most. Even five brief conversations can reshape your roadmap. Ask simple questions: What frustrates power users right now? What features did they stop using, and why? This feedback doesn't live in dashboards or pitch decks — it lives in the space between what users say and what they wish existed. Another key use of this pause is building owned distribution. Paid channels are overpriced during market stagnation, and unless you've raised a mega-round, you can't outbid incumbents. Instead, focus on organic reach and audience trust. Use content marketing tools like Substack or Beehiiv to grow an email list that's immune to algorithm shifts. Invest time in SEO and keyword ranking. Record short product explainers or vision videos with Loom or Descript — not to "go viral," but to humanize your build process and deepen audience trust through transparency. When markets heat up, people will remember the builders who kept showing up in the quiet— and say, "I've got the alpha on a hot project that's about to pop." Macro signals are aligning. Long-term bond yields are starting to wobble, suggesting markets expect increased government stimulus or monetary easing. Chinese capital markets are showing signs of foreign inflows again, especially in ETF activity across Hong Kong and Singapore. Central bank rhetoric is shifting — from "containment" to "cooperation." Once that shift becomes public and coordinated, markets will snap back, starting with high-risk, high-reward sectors like crypto, AI infrastructure, e-commerce and frontier B2B tooling. Here's the truth most won't say: you won't have time to prepare when that happens. The winners of the next cycle won't be those who waited patiently for conditions to improve. They'll be the founders who treated this silence like a sprint, not an intermission. Then boom! Silicon Valley's legendary VC, Tim Draper, wrote a social media post saying, "Slack transforms communication, Microsoft responds with Teams. Tesla enters the market, and suddenly every automaker rediscovers innovation. Progress happens in bursts of energy." Related: 6 Hidden Costs of Scaling Your Business Too Quickly Being first to market matters. That means launching scrappy MVPs before they're perfect. Writing landing pages before the product is done. Building waitlists and generating buzz, even if customer acquisition costs aren't optimized. This isn't the time for polish; it's the time for presence. Investors remember who shipped, who listened and who made noise without needing a bull market to do it for them. This moment in the cycle doesn't feel urgent, but it is. The silence is a setup. The only founders who survive the surge will be those building now, shipping weekly, while the world isn't watching. Ship faster. Build deeper. Talk to your loyal users. Grow your content channels. Engage. Because when capital returns, it won't send a save-the-date. It will kick the door down. And everything you've built in this quiet stretch will either stand or be swept away when the big players come in.

Trump says he's considering ‘taking away' Rosie O'Donnell's US citizenship
Trump says he's considering ‘taking away' Rosie O'Donnell's US citizenship

Boston Globe

time36 minutes ago

  • Boston Globe

Trump says he's considering ‘taking away' Rosie O'Donnell's US citizenship

Advertisement It's just the latest threat by Trump to revoke the citizenship of people with whom he has publicly disagreed, most recently his former adviser and one-time ally, Elon Musk. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up But O'Donnell's situation is notably different from Musk, who was born in South Africa. O'Donnell was born in the United States and has a constitutional right to U.S. citizenship. The U.S. State Department notes on its website that U.S. citizens by birth or naturalization may relinquish U.S. nationality by taking certain steps – but only if the act is performed voluntary and with the intention of relinquishing U.S. citizenship. Amanda Frost, a law professor at the University of Virginia School of Law, noted the Supreme Court ruled in a 1967 case that the Fourteen Amendment of the Constitution prevents the government from taking away citizenship. Advertisement 'The president has no authority to take away the citizenship of a native-born U.S. citizen,' Frost said in an email Saturday. 'In short, we are nation founded on the principle that the people choose the government; the government cannot choose the people.' O'Donnell moved to Ireland after Trump defeated Vice President Kamala Harris to win his second term. She has said she's in the process of obtaining Irish citizenship based on family lineage. Responding to Trump Saturday, O'Donnell wrote on social media that she had upset the president and 'add me to the list of people who oppose him at every turn.'

Lawmakers visit ‘Alligator Alcatraz' after being blocked
Lawmakers visit ‘Alligator Alcatraz' after being blocked

Boston Globe

timean hour ago

  • Boston Globe

Lawmakers visit ‘Alligator Alcatraz' after being blocked

Advertisement Cage-style units of 32 men share three combination toilet-sink devices, the visitors measured the temperature at 83 degrees (28 degrees Celsius) in one area that was billed as air-conditioned and grasshoppers and other insects abound, she and other Democrats said. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up President Trump, Florida Governor Ron DeSantis, and Homeland Security Secretary Kristi Noem toured "Alligator Alcatraz" on July 1. During a tour on Saturday, journalists weren't allowed inside the facility, and lawmakers were instructed not to bring phones or cameras inside. Evan Vucci/Associated Press Although the visitors said they weren't able to speak with the detainees, Rep. Maxwell Alejandro Frost, a Democrat from Florida, said one called out 'I'm an American!' and others chanting, 'Libertad!,' a Spanish word for 'freedom.' State Sen. Blaise Ingoglia, a Republican from Florida, countered that he had seen a well-run, safe facility where the living quarters were clean and the air conditioning worked well. He recalled that a handful of detainees became 'a little raucous' when the visitors appeared but said he didn't make out what they were saying. Advertisement 'The rhetoric coming out of the Democrats does not match the reality,' he said by phone. 'It's a detention center, not the Four Seasons.' Journalists weren't allowed on the tour, and lawmakers were instructed not to bring phones or cameras inside. Messages seeking comment were sent to the state Division of Emergency Management, which built the facility, and to representatives for Gov. Ron DeSantis. DeSantis spokesperson Molly Best highlighted one of Ingoglia's upbeat readouts on social media. Related : DeSantis and fellow Republicans have touted the makeshift detention center — an agglomeration of tents, trailers and temporary buildings constructed in a matter of days — as an efficient and get-tough response to President Donald Trump's call for mass deportations. The first detainees arrived July 3, after Trump toured and praised the facility. Described as temporary, the detention center is meant to help the Republican president's administration reach its goal of boosting the United States' migrant detention capacity from 41,000 people to at least 100,000. The Florida facility's remote location and its name — a nod to the notorious Alcatraz prison that once housed federal inmates in California — are meant to underscore a message of deterring illegal immigration. Rep. Debbie Wasserman Schultz spoke ahead of a tour of the Dade-Collier Training and Transition Facility. Some Republicans have claimed that Democrat's "rhetoric" about the detention facility "does not match the reality." Alexandra Rodriguez/Associated Press Ahead of the facility's opening, state officials said detainees would have access to medical care, consistent air conditioning, a recreation yard, attorneys and clergy members. But detainees and their relatives and advocates have told The Associated Press that conditions are awful, with worm-infested food, toilets overflowing onto floors, mosquitoes buzzing around the fenced bunks, and air conditioners that sometimes shut off in the oppressive South Florida summer heat. One man told his wife that detainees go days without getting showers. Advertisement Florida Division of Emergency Management spokesperson Stephanie Hartman called those descriptions 'completely false,' saying detainees always get three meals a day, unlimited drinking water, showers and other necessities. 'The facility meets all required standards and is in good working order,' she said. Five Democratic state lawmakers tried to visit the site when it opened July 3 but said they were denied access. The state subsequently arranged Saturday's tour. The lawmakers have sued over the denial, saying that DeSantis' administration is impeding lawmakers' oversight authority. A DeSantis spokesperson has called the lawsuit 'dumb.' As Democratic officials headed into the facility, they said they expected to be given a sanitized and limited view. Wasserman Schultz told reporters the lawmakers came anyway because they wanted to ask questions and get a sense of the structure and conditions. Peltz reported from New York, and Rodriguez reported from Ochopee.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store