IRS Processes 98% of Tax Returns Despite Staffing and Tech Strains The Internal Revenue Service (IRS) managed to process nearly all tax returns during the 2026 filing season, but the agency faced significant challenges due to staffing shortages, outdated technology, and the implementation of new tax provisions. A Government Accountability Office (GAO) report released in August highlighted how these issues forced the IRS to rely more heavily on external vendors and automation, while taxpayers experienced longer wait times for paper refunds, refunds, and customer service. The report also raised concerns about the long-term sustainability of the agency’s operations and whether Congress will take action to address the growing capacity crisis. The filing season, which ran from January 26 through April 15, tested an agency that had already lost thousands of employees during fiscal 2025 while implementing new tax rules. The IRS received approximately 177 million individual and business tax returns, processing about 98% of them, matching the prior year’s rate. Nearly 95% of returns were filed electronically, but paper returns faced severe delays. Systems used to process paper filings were not fully operational at the start of the season, with the individual paper-processing system unable to handle 2025 returns for the first six weeks. The scanning system for business paper returns was entirely unavailable throughout the filing season, forcing the IRS to send about 3.7 million business paper returns to outside vendors for scanning and electronic submission. This marked a sharp increase from the previous year, when only 443,000 business paper returns were processed by vendors.#customer_service #irs #tax_returns #government_accountability_office #paper_refunds
