Advocate: IRS had strong filing season for online taxpayers, weaker one for others

The IRS largely delivered a successful 2026 filing season, processing tens of millions of returns and issuing most refunds without delay, but taxpayers who needed help from a human faced long waits, service challenges, and confusion, National Taxpayer Advocate Erin Collins said in a report released Wednesday.

“The filing season demonstrated both the promise and limitations of technology,” Collins wrote in the preface to her Fiscal Year 2027 Objectives Report to Congress. “Continued improvements in technology helped the IRS process returns and deliver refunds efficiently for most taxpayers. Yet technology alone cannot resolve every taxpayer issue. Taxpayers facing identity theft, refund delays, financial hardship, language barriers, disabilities, or complex account issues often need individualized assistance from knowledgeable employees who can explain problems, answer questions, and help bring cases to resolution.”

Still, the agency “performed better than expected in most respects” despite entering the season with several challenges — most notable the implementation of sweeping new tax legislation with H.R. 1, P.L. 119-21, known as the One Big Beautiful Bill Act; significant workforce reductions; and leadership turnover.

The report highlighted the scale of the filing season. The IRS processed about 139 million individual tax returns, with roughly 98% filed electronically. About 65% of those returns resulted in refunds, and nearly all refunds were issued via direct deposit.

Taxpayers increasingly relied on digital tools. The IRS recorded nearly 121 million logins to individual online accounts during the filing season, and users accessed information returns more than 3.7 million times. Such tools reduce the need for taxpayers to call or visit an IRS office, the report said.

But for millions of taxpayers, Collins wrote, “the filing season was frustrating, confusing, and financially disruptive.” Returns flagged by IRS filters were frozen for review, leaving some taxpayers waiting weeks or months for refunds.

More than 14 million individual returns were suspended during processing. Over 1 million taxpayers waited beyond the IRS’s normal processing time for refunds, with an average delay of 5.5 weeks.

Service challenges also persisted. The IRS answered 21% of the 48.1 million calls it received overall, down from 25% the prior year. Average wait times rose to 14 minutes, up from eight minutes in the previous filing season. Performance varied widely by phone line.

The report also flagged problems tied to a push toward electronic payments. While more refunds were issued by direct deposit, some taxpayers — including those without bank accounts or reliable internet access — struggled to receive paper checks.

Identity theft cases remained a major concern. Collins again called delays “unconscionable,” noting that many victims wait close to two years to resolve cases and receive refunds. More than half a million such cases remained pending at the end of the filing season.

The report outlined 11 advocacy priorities for the coming year, including reducing identity theft case delays, improving processes for taxpayers needing paper checks, enhancing online accounts for practitioners, and making it easier for taxpayers to comply with digital asset reporting rules.

Collins also reported that the IRS has agreed to implement 47 of 64 administrative recommendations from her 2025 annual report, in full or in part, as efforts to improve service and processing continue.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.