The IRS might not be top of mind – until you’re waiting on a refund, need tax documents for a loan, or trying to resolve an issue. Recent cuts to IRS staffing and resources could make these situations even more frustrating, leading to delays, longer wait times, and mounting challenges for taxpayers.

We saw this play out during the COVID-19 pandemic, when IRS backlogs led to lost tax filings, destroyed documents, extended refund delays, and unanswered inquiries. While the government continues to expand tax laws and compliance requirements, the resources available to process and enforce them haven’t kept pace. So, what does that mean for you?

More Delays Across the Board

Fewer IRS employees mean slower processing times, which can affect everything from tax refunds to loan applications.

• Refunds May Take Longer – If you’re expecting money back, prepare for a longer wait. The IRS processes returns year-round, so this isn’t just a concern during tax season.
• Loan Approvals Could Be Delayed – Many lenders require IRS transcripts to verify income, and if processing slows down, securing a loan for your practice could take longer.
• Tax Notices Won’t Get Resolved Quickly – If you receive a notice from the IRS, don’t expect a fast resolution. Even simple tax matters can now take months – or even years – to process, potentially requiring congressional intervention to get unstuck.

Less Access to IRS Help

Reaching the IRS has never been easy, and it’s only getting harder.

• Longer Hold Times (or No Answer at All) – At the height of the pandemic, phone wait times stretched to hours, only for calls to be disconnected. Some IRS phone lines stopped answering calls altogether, even while taxpayers were instructed to contact them.
• Paper Documents Could Sit Unprocessed – The IRS has historically struggled with paper filings. In 2021, the agency admitted to shredding 30 million unprocessed tax documents. While electronic processing has improved slightly, some taxpayer filings and responses still require paper submissions, leading to inevitable delays.

Increased Costs for Taxpayers

The more difficult it becomes to interact with the IRS, the more time and effort it takes to resolve tax issues. When tax matters drag on, the fees we have to charge can increase due to repeated follow-ups and resubmissions. While we work hard to minimize these burdens for our clients, ongoing IRS inefficiencies mean simple issues can become time-consuming and costly.

What Comes Next?

The ideal solution? A tax system that is easier to navigate, with IRS staffing and technology that allow it to function efficiently. Whether or not that happens, taxpayers will still need to comply with IRS rules – and face the consequences of delays when they arise.

We’re keeping a close eye on these developments and will continue to keep you informed. If you need assistance with tax filings, notices, or IRS correspondence, we’re here to help you get through it as smoothly as possible.