EITC Refunds Face New Scrutiny Amid IRS Staffing Crisis

WASHINGTON (Azat TV) – Millions of American taxpayers claiming the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are facing potential delays in receiving their refunds this tax season, as the Internal Revenue Service (IRS) grapples with a substantial reduction in its workforce. The 2026 tax filing season, which opened on January 26, is unfolding against a backdrop of increased refund amounts due to new legislation, but also significant operational challenges within the tax agency.

While the IRS typically issues most refunds within 21 days for electronically filed returns, those claiming credits like the EITC or CTC often experience longer processing times. This year, these delays are exacerbated by a nearly 27% reduction in the IRS workforce, from over 102,000 employees in January 2025 to approximately 74,000 by December 2025, according to National Taxpayer Advocate Erin Collins’ annual report. This staffing crisis is raising concerns about the agency’s capacity to handle an anticipated 164 million individual income tax returns efficiently.

IRS Staffing Cuts Impact Refund Processing

The IRS’s substantial staff reduction, particularly the departure of 22% of its customer representatives, is poised to impact service quality and refund processing times. Experts warn that the loss of experienced workers with institutional knowledge and technical expertise cannot be easily replaced. This situation creates a challenging environment for taxpayers, especially those with more complex returns or those needing assistance with new tax provisions.

Former IRS Commissioner Danny Werfel, who served until January 2025, acknowledged the ‘vulnerabilities when you combine a rollout of new and technically complex provisions with staff reductions.’ He specifically highlighted potential issues with phone support, stating, ‘service quality on phone lines is where rubber will hit the road,’ particularly for taxpayers seeking clarification on new measures like U.S. assembly requirements for vehicle-related credits.

Bigger Refunds Amid Operational Challenges

Despite the operational hurdles, many taxpayers are expected to receive larger refunds this year, largely due to provisions within the One Big Beautiful Bill Act (OBBBA), also known as the Working Families Tax Cuts Act. This legislation, which took effect in 2025, includes significant tax cuts such as no taxes on tips and overtime wages (up to $25,000 and $12,500 respectively), an expanded child tax credit, and new deductions for car loan interest and seniors. The Tax Foundation estimates the average federal tax refund could climb to $3,800 this year, up from $3,052 in the 2024 tax year.

However, the increased refund amounts, while beneficial for taxpayers, place additional strain on a depleted IRS. Garrett Watson, director of policy analysis at the Tax Foundation, noted that the agency hasn’t directed employers to adjust withholding amounts to reflect the new tax provisions, meaning the benefits will primarily manifest as larger refunds. This necessitates more intensive processing by an agency already struggling with reduced personnel.

Shuttering of Direct File Program Adds Pressure

Further complicating the tax season is the discontinuation of the IRS’s Direct File program. This in-house pilot software, which allowed taxpayers to file for free, garnered high satisfaction ratings but was pulled by the current administration. Its absence means taxpayers who previously relied on the program will now need to seek alternative filing methods, potentially adding to the volume of inquiries and demands on IRS customer service. This decision, coupled with the staffing cuts, has led to warnings from experts like Watson about the risk of ‘lower quality service for taxpayers who reach out and a higher risk of errors on returns processed or corrected by the agency.’

Treasury Secretary and acting IRS Commissioner Scott Bessent, in a press release marking the start of filing season, expressed confidence in the agency’s ability to ‘deliver results and drive growth for businesses and consumers alike.’ However, the concerns raised by the National Taxpayer Advocate and former IRS officials underscore the precarious balance between new tax benefits and the agency’s diminished capacity to administer them effectively.

The confluence of generous new tax credits and a significantly downsized IRS workforce presents a critical challenge for the 2026 tax season, potentially transforming the receipt of anticipated larger refunds into a test of patience for millions of American families who rely on timely processing, particularly those claiming essential credits like the EITC.