WASHINGTON, D.C. — American taxpayers may need extra patience this year. A perfect storm of staffing shortages, a massive backlog of amended returns, and the shadow of a partial government shutdown is threatening to extend the usual 21-day refund window.
A recent Treasury Department report indicates that the IRS has lost nearly 27% of its workforce since January 2025, largely due to layoffs spearheaded by the Department of Government Efficiency (DOGE). With millions of Americans filing for their 2025 returns, the agency is now struggling to maintain its standard service levels.
1. The “DOGE” Impact: Why Staffing is Down
The workforce reduction follows an aggressive series of cuts aimed at federal modernization.
- The Layoffs: Initiated in early 2025, these cuts removed thousands of employees, including highly specialized agents in the Large Business and International (LB&I) division.
- The Consequences: Fewer hands to process manual data and a reduced capacity for customer service. The IRS has officially lowered its telephone response goal from 85% to 70% for the current season.
2. Amended Returns: The 590,000-File Backlog
If you need to correct a past mistake on your taxes, prepare for a long wait.
- The Surge: The backlog for amended returns has climbed to 590,000, roughly four times higher than pre-pandemic averages.
- The Delay: While standard e-filed 1040s are still targeted for a 21-day turnaround, amended returns are currently taking months to resolve as they require manual review by a shrinking pool of agents.
3. Refund Estimates & Interest Rates (2026)
Despite the delays, refunds are expected to be significantly larger this year due to new provisions in the “One, Big, Beautiful Bill” tax legislation.
| Metric | 2025 (Last Year) | 2026 (Projected/Current) |
| Average Refund | $3,167 | ~$4,200 (+$1,000 increase) |
| IRS Interest Rate | 8% | 7% (on late refunds) |
| Interest Paid by IRS | $2.6 Billion | TBD (Rising due to delays) |
Note: By law, if the IRS takes longer than 45 days to issue your refund after the filing deadline, they must pay you interest (currently 7% for Q1 2026).
4. Digital Mandate: The End of Paper Checks?
Under Executive Order 14247, the IRS is aggressively phasing out paper checks.
- Direct Deposit Required: Most taxpayers are now required to provide bank routing information.
- Frozen Refunds: If direct deposit info is missing, the IRS may freeze the refund for up to six weeks until the taxpayer updates their online account.