According to the National Taxpayer Advocate’s Mid-Year Report to Congress, the 2025 tax filing season was a success. Nearly 141 million individual returns were received, 138 million were processed, and over 95 percent of those processed returns were filed electronically. In a world where headlines touting a functioning government is relatively rare, this performance from the IRS is worth a note.
That said, success is relative.
Peeling back the topline numbers, a different story emerges—exposing gaps in IRS staffing, technology adoption, and taxpayer support. More than 13 million returns were “suspended” during processing—not processed—triggering refund delays. Identity theft victims can still face resolution wait times measured in years. And looming tax law changes in 2026 threaten to swamp an agency that has shed more than a quarter of its workforce in the first half of 2025.
If this was a good filing season, the writing on the wall is clear: the IRS needs more people, more funding, and more support. All indications are it’ll be receiving less of all three.
To be clear, the IRS deserves credit for processing millions of returns with relative ease, during a time of administrative upheaval, and given its aging technology and a workforce seemingly shrinking by the day. The National Taxpayer Advocate’s report, however, makes it clear that even in a good year—major cracks remain and are poised to deepen.
The more immediate concern may be the fact that the IRS currently takes an average of 20 months to resolve cases for identity theft victims—a veritable millennia for individuals that did everything right but still found their refunds frozen. Almost 70% of folks caught in that net fall below 250 percent of the federal poverty line. Thus, they are, likely, waiting on money they depend on for rent, utilities, and even groceries. In practical terms a 20-month delay is a public policy failure.
Perhaps more concerning, much of the IRS’ current performance may be being propped up by short-term modernization efforts and temporary funding from the Inflation Reduction Act. It is hard to envision continuing high performance when the agency workforce shrank by 26% between January and June 2025, from 102,000 employees to under 76,000. That isn’t just trimming fat, that is hitting bone.
In 2026, a slate of provisions from the 2017 Tax Cuts and Jobs Act are set to expire—requiring major rewriting of withholding tables, guidance, forms, and likely causing a tsunami of taxpayer confusion. All of that relies on an IRS workforce that may not exist at the necessary scale.
The report is not without hope for the future—the agency plans to integrate the 60+ disparate case management systems, continue digitizing paper returns, and integrate online accounts. These are all, without question, essential steps. But even a flawlessly designed system is going to need people to implement it and chase bugs when they pop up.
In addition, not every taxpayer has ready access to the internet. According to a 2024 National Telecommunications and Information Administration study, 83 percent of Americans over the age of 3 use the internet. That still leaves 17 percent of the population, at least a portion of which are taxpayers, that do not. An effective IRS is one that modernizes without becoming inaccessible to the people it serves. The agency is laudably trying to do both, but that isn’t possible without sustained investment.
The National Taxpayer Advocate rightly urges the IRS to reduce identity theft case timelines but that, as with all other efforts in furtherance of accessibility and modernization, requires real capacity. Building capacity means hiring and training new staff before cuts cause a collapse.
Tax administration is often written off as a bureaucratic morass—a neutral, technocratic function made necessary by the modern state but best kept as small as possible. How we fund tax administration, however, has consequences for distributive justice. When returns are delayed for taxpayers most in need, when phones go unanswered, and when technology fails—those burdens fall heaviest on the shoulders least able to bear the burden.
A truly successful filing season isn’t one that runs smoothly despite shrinking resources and depleted ranks—it should be one that lifts the floor for everyone, beginning first with the most vulnerable. That takes political will.
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