The Trump administration’s purge of federal bureaucracy last year did not spare the Internal Revenue Service, the agency responsible for collecting taxes and processing returns. Last July, about 25,000 employees left the agency through layoffs or deferred resignations, about 25% of agency workers. Many more were released last fall during the government shutdown. The administration framed cutting the agency’s headcount as a step toward modernity and greater efficiency. But at least in the short term, the skeleton crew that oversees the IRS may struggle to deliver on Trump’s windfall promises.

The IRS now employs nearly as many people as it did in 2021, and because of last year’s extended shutdown, the agency was unable to hire and train employees to help with filing season, according to a Treasury Department watchdog. report released last week. This, combined with a growing backlog of unprocessed tax-related items from years past, can add to the frustration for filers expecting a quick return.

The issues plaguing the agency “may impact the IRS’s ability to timely process tax returns during the filing season, particularly with staff reductions,” according to the report. “This could result in delays for taxpayers to receive refunds.”

This disruption could destroy what Trump himself has been up to recently honored as the “biggest tax payer of all time.” The tax provisions of the One Big Beautiful Bill Act passed last year included several tax breaks and income tax cuts.

The changes may have reduced the individual tax on $129 billionaccording to the Tax Foundation, a nonpartisan think tank. Up to $100 billion of that could be extended in refunds, resulting in an average return of up to $1,000 more than last year.

But because the IRS didn’t adjust withholdings before the law was passed, most workers paid the previous year’s tax. That means many will walk away with multiple returns this filing season, even on paper.

Bad tax season

That is, if the IRS gets the refunds on time. The recent watchdog report paints a picture of an agency suffering from severe staff shortages and years of unprocessed claims since the pandemic. The report found that the terminations reduced the head count by 17% of the top roles at the time of filing. In addition, the inventory of backlogged claims has more than doubled since 2019 to 2 million items this year, affecting the agency’s ability to process new claims on time.

The record, 43-day government shutdown last fall furloughed IRS employees working on that list of unprocessed items, and also affected the agency’s hiring plans. Most years, the IRS relies heavily on seasonal workers during tax season. But by the end of 2025, the agency has fully onboarded 50 of the 2,200 employees it planned to hire, or just 2%. With the IRS generally needing 60 to 80 days to train new employees, and tax season starting last week, the agency will cut its workload this year.

Last year, Treasury Secretary Scott Bessent said the IRS would rely more on AI and automation software due to staff shortages. The watchdog report said that AI-powered products could be useful to IRS agents in the coming tax seasons, but this year’s rollout was slow and full of bugs, mainly because of IT staff cuts.

All in all, it’s shaping up to be a tough tax season for the rest of the IRS employees and people looking forward to returning on time. Delayed tax refunds can be bothersome for some people, but low-income households in particular tend to depend heavily on that timely check. The return can be a life line for households earning less than $30,000 per year, it usually represents the single largest payment they will receive in a year, and many use it to pay off debt or make major essential purchases. Prompt payment is especially important for people who qualify for subsidies such as the child tax or earned income tax credit.

Americans are increasingly dependent on refunds each year, with a survey last year found that nearly half of taxpayers said they were relying more on their refund to meet their needs than before.