Concerns
Perils Await in Next Year’s Tax Season
The next tax-filing season — for 2025 taxes — might be one to remember, but not for reasons taxpayers would prefer.
While many provisions of the new federal budget law signed by President Donald Trump are being welcomed by probably most Americans, because of tax benefits the budget package will provide, it is the upcoming filing season itself that could be a major cause of distress and taxpayer unrest as 2026 dawns.
That’s especially true for taxpayers due a refund who depend on that refund arriving quickly to meet financial obligations.
Perhaps timely refunds will not be a problem after all; that remains to be seen.
Only the tax-filing exercise will be capable of providing that answer.
However, an Associated Press article published in the Mirror’s June 26 edition contained some ominous signals that could portend a less-than-desirable filing experience, not only about the arrival of refunds but also about tax-form preparation.
Of course, taxpayers who pay others to prepare their tax documents won’t experience preparation headaches like those who choose to “do their own taxes.” However, some anxiety is likely to exist nonetheless until the tax-preparation exercise is finished.
First, here is what might be ahead on the refund front:
According to the June 26 AP article, the Internal Revenue Service workforce stood at 75,702, compared with 102,113 workers a year earlier.
Those official numbers were the first announced since Elon Musk’s Department of Government Efficiency’s actions began.
“Most of the (now former) employees took the ‘fork in the road’ resignation offer from DOGE rather than waiting to get laid off,” the June 26 article reported.
The new report said the just-signed-into-law budget was geared up toward implementing a 20% reduction in IRS funding during the new federal fiscal year, which begins Oct. 1.
If nothing changes, going forward, that would amount to a 37% reduction when taking into account the supplemental funding that was included in the Biden-era Inflation Reduction Act that Republicans stripped away previously.
It is hard to fathom how such a pared-down workforce will be able to wade through quickly the “mountain” of incoming tax returns filed in paper form or electronically between next January and April 15.
That’s especially something to acknowledge, considering the delays that prevailed during the pandemic, when full-staff availability did not exist and approved out-of-the-office processing of returns took place.
The pandemic-related delays not only were maddening for the then-current tax year, but much worse in many instances for amended returns.
The IRS, as it provides updates leading up to 2026, should indicate whether any unfinished tax-processing work from 2024 or any prior tax year remains outstanding. Even that tidbit of information would help taxpayers gauge the prospects of how the 2025 tax work might proceed.
Although Erin M. Collins, the head of the organization assigned to protect taxpayers’ rights, has dubbed the 2025 filing season (for 2024 taxes) “one of the most successful filing seasons in recent memory,” she has warned that the 2026 season, with all of its changes, could be rocky.
She said a manpower reduction of the magnitude that has occurred is likely to impact taxpayers, but also potentially the revenue that is collected.
“New budget bill could strain IRS” was the headline of the June 26 article but, all considered, it is right to assume that there will be plenty of other strains to go around.