IRS Staffing Down 27% This Filing Season

The IRS is operating with 27% fewer employees this tax season compared to last year. At the same time, filing complexity is up thanks to new OBBBA provisions on tips, overtime, seniors, car loans, and the SALT cap increase.

That’s the reality tax professionals are navigating right now — and it’s affecting everything from refund timelines to phone support to audit risk.

What 27% Fewer Employees Means

The IRS processed 36.5 million refunds as of February 27, with an average payout of $3,742 per return — up 10.6% from the same period last year. If a return is straightforward, electronically filed, and has no errors or red flags, refunds are arriving within three weeks.

But anything that triggers additional verification, includes certain credits, or requires manual review is taking longer. Jan Lewis, vice chair of the AICPA, confirmed that returns with complicating factors are facing delays, likely due to increased fraud screening and verification procedures.

Translation: if your client’s return is simple, they’ll get their refund on time. If it’s complex, plan for weeks — maybe months.

New OBBBA Provisions Add Complexity

The One Big Beautiful Bill Act introduced five major new deductions for the 2025 tax year. That means the IRS is processing returns with brand-new provisions while operating at 73% capacity.

Confusion is widespread. Clients think "no tax on tips" and "no tax on overtime" mean full exemptions. They don’t. They’re deductions with income limits, qualification requirements, and documentation rules that are still evolving. The IRS updated the tips deduction rules last week — mid-filing season.

Tom O’Saben, director of tax content for the National Association of Tax Professionals, noted that guidance is "still subject to updates." That’s a polite way of saying practitioners are filing returns under rules that might change.

Documentation Is a Mess

The IRS didn’t update the W2 form for 2025. Reporting qualified tips and overtime on W2s was optional for employers this year — it becomes mandatory in 2026. So for 2025 returns, CPAs are relying on paystubs, tip logs, and employer statements to verify deductions.

"We don’t have a set structure in place that we will have in 2026," O’Saben said. That lack of structure means more time per return, more client back-and-forth, and more risk of IRS challenges down the line.

What Tax Pros Are Seeing

Refunds are processing quickly — if the return is clean. But anything that needs manual review or additional verification is slowing down. Lewis emphasized that straightforward e-filed returns with direct deposit are still getting refunds within three weeks.

Phone support is inconsistent. Some practitioners report reasonable wait times and helpful agents. Others describe long holds and limited guidance on new provisions.

The IRS is doing what it can with reduced capacity. But that doesn’t change the fact that tax professionals are managing client expectations around delays, unclear guidance, and evolving rules — all while the agency operates at 73% staffing.

What CPAs Should Tell Clients

Set realistic timelines. If a return includes new OBBBA deductions, multiple income sources, or anything requiring verification, don’t promise a three-week refund. Plan for longer.

Manage expectations on documentation. Clients need paystubs, tip records, and employer statements for 2025 returns. Next year will be easier — but this year is manual.

The IRS is stretched thin. That doesn’t mean ignoring rules or cutting corners. It means understanding that responses will be slower, guidance will evolve, and some returns will sit in queue longer than usual.

The 27% staffing cut isn’t temporary. This is the new baseline. Plan accordingly.