Headcount fell by about 29,000 in one year
The Treasury Inspector General for Tax Administration reports that IRS staffing fell from roughly 103,000 employees in January 2025 to 74,000 in January 2026—a decline of about 29,000, or 28%. TIGTA describes the change as 30% after rounding and identifies workforce capacity as a central fiscal-year 2027 management challenge.
The hiring gaps were concentrated in work taxpayers feel directly. The IRS could not hire 1,100 of 1,900 planned submission-processing employees and 1,200 of 3,500 planned accounts-management employees. Overtime rose 12%, or $27 million, in the comparison period.
| Indicator | Reported result |
|---|---|
| Employees | 103,000 to 74,000 |
| Submission-processing shortfall | 1,100 of 1,900 planned |
| Accounts-management shortfall | 1,200 of 3,500 planned |
| Overtime change | +12%, or $27 million |
Modernization expanded access but exposed control gaps
More than 64 million people had online IRS accounts, an increase of 13 million. At the same time, TIGTA said 99% of more than 18,000 SharePoint sites lacked audit logs or an access-control method. Those are different measures: account adoption shows digital demand, while internal logging shows whether administrators can reconstruct access and changes.
The review also says Inflation Reduction Act funding had been reduced from $80 billion to $26 billion, with $16.5 billion—64%—spent by March 31, 2026. The spending rate does not by itself establish waste; it shows how much of the smaller funding pool had already been committed.
Taxpayer harm is visible in long identity-theft cases
Identity-theft cases averaged nearly two years, and the IRS paid more than $124 million in refund interest over two years, TIGTA reported. The watchdog also flagged more than 470,000 returns claiming $977 million in questionable car-loan deductions, with an estimated $122 million tax effect.
Questionable does not mean fraudulent. The returns are risk indicators requiring review, just as an open identity-theft case is not proof the IRS caused the original crime.
Method and limits
This newsroom cross-checked the workforce endpoints, converted the 29,000 decrease to a percentage and separated TIGTA's findings from newsroom calculations. Every operational claim is attributed to the inspector general's management-challenges report.
The report combines indicators from different periods and audits. It does not prove that staffing loss alone caused every delay or control weakness, and future appropriations or hiring could change the outlook.
Sources and further reading
TIGTA, Management and Performance Challenges Facing the IRS for FY 2027 ↗