The "National Taxpayer Advocate’s Fiscal Year 2026 Objectives Report to Congress" is a statutory report submitted annually by the National Taxpayer Advocate to Congress, outlining the objectives for the upcoming fiscal year. This report also includes an analysis of the recently completed 2025 tax filing season to provide context regarding the IRS’s performance and taxpayer challenges, which then informs the systemic advocacy and research objectives for the fiscal year 2026.

Review of the 2025 Filing Season: A Measured Success with Lingering Issues

Overall, the 2025 filing season was characterized as a "measured success" and was generally smooth for most taxpayers, marking the third consecutive year of improved taxpayer service since the COVID-19 pandemic disruptions. Key achievements included:

High e-filing rate: Over 95 percent of individual returns were filed electronically, with the majority processed promptly.
Refunds issued: More than 60 percent of taxpayers received refunds, primarily within standard processing timeframes, including essential credits like the Earned Income Tax Credit (EITC) and Child Tax Credit.
Increased e-file capabilities: The IRS provided the ability to e-file 22 additional tax forms.
Improved phone service on Accounts Management (AM) lines: The IRS achieved an 87 percent Level of Service (LOS) on its AM telephone lines with an average call wait time of three minutes, meeting its 85 percent LOS goal for the third consecutive filing season. A callback option was also provided 2.6 million times.
Expanded online account functionality: Taxpayers could download nine types of information returns for tax year 2024 using Individual Online Accounts. Individual Online Account (IOLA) capabilities were expanded to include creating/modifying payment plans, an offer in compromise pre-qualifier, two-way secure messaging, and viewing 21 additional digital notices.
Extended Taxpayer Assistance Center (TAC) hours: 15,000 extended weekday hours were offered at TACs.

This success was attributed to several factors: extensive advance work by the IRS, including early hiring, training, and IT modifications; no significant tax law changes in 2024; and a large IRS workforce of over 100,000 employees.

Despite these improvements, the review highlighted significant systemic issues that continue to undermine taxpayer trust and delay refunds. These include:

Suspended Returns: Over 13 million individual returns were suspended during processing in FS 2025, with more than 2.1 million flagged by identity theft filters. As of April 18, 2025, almost 3.4 million returns were suspended for reasons such as error resolution or potential identity theft.
Limitations of Telephone Level of Service (LOS) Metric: While the IRS reported an 87% LOS on AM lines, this metric is limited. It excludes calls routed to compliance functions and automated systems, and does not provide qualitative insight into whether the taxpayer's issue was resolved. For all calls received, only 32% were answered by an IRS employee. Non-AM lines, such as the Taxpayer Protection Program (TPP) line (29% LOS) and the Installment Agreement/Balance Due line (46% LOS), experienced much lower service levels. The low LOS on the TPP line particularly impacts taxpayers needing to verify their identity to receive refunds.
Correspondence and Amended Return Backlogs: To achieve high LOS on phone lines, the IRS reallocated staffing resources away from processing correspondence and amended returns. As of April 18, 2025, there was a total unprocessed inventory of 3.8 million correspondence and amended returns. Delays in reviewing responses to math error notices, for example, can lead to incorrect account adjustments and potential IRS collection actions.
Identity Theft Victim Assistance (IDTVA) Delays: The resolution of IDTVA cases continues at a "glacial pace". As of April 30, 2025, these cases were taking an average of 602 days (nearly 20 months) to resolve, with about 387,000 cases in inventory at the end of FS 2025. These delays disproportionately affect vulnerable populations dependent on their refunds. Contributing factors include the reassignment of IDTVA employees to other high-priority assignments, such as answering toll-free phone lines.
Document Upload Tool (DUT) Backend Problems: Although taxpayers can submit documents electronically via the DUT, the IRS lacks the backend systems to process these submissions electronically, often requiring them to be printed and manually routed, which delays resolution and ties up resources.
Online Account Functionality Gaps: While progress has been made, the current digital offerings are still limited in scope, often forcing users to revert to traditional service channels. The IRS needs to provide fully functional online accounts that mirror the robust functionality offered by banks and other financial institutions.
Employee Retention Credit (ERC) Processing Delays: The IRS has made progress in processing ERC claims, but hundreds of thousands still await attention. The average processing time for ERC claims was approximately 546 days (over 18 months) in 2025. Additionally, IRS communication regarding disallowances has been unclear, omitting critical information on how taxpayers can appeal.
IRS Workforce Reductions: The IRS workforce has been reduced by more than 25 percent since the beginning of 2025, primarily through employee departure incentives. This loss of experienced personnel creates vulnerabilities in service delivery and return processing.

Connecting the 2025 Filing Season Review to FY 2026 Objectives

The challenges identified during the 2025 filing season directly inform the Taxpayer Advocate Service (TAS) Systemic Advocacy Objectives for Fiscal Year 2026. The report emphasizes that addressing these issues is critical to improving the taxpayer experience, protecting taxpayer rights, and ensuring efficient tax administration.

The objectives outlined for FY 2026 are designed to tackle these systemic problems:

Improve Automation and Metrics to Enhance the Taxpayer Experience (Objective 1): This objective directly addresses the issues with paper processing and phone service metrics. TAS advocates for end-to-end paperless processing and adopting enhanced metrics that evaluate the overall taxpayer experience, including resolution quality, rather than just call connection rates. It also prioritizes the Taxpayer 360 initiative to provide CSRs with comprehensive taxpayer data.
Expand IRS Online Account Functionality (Objective 2): This objective aims to address the limited digital offerings by advocating for a "digital first" strategy to allow taxpayers to conduct all transactions with the IRS via online accounts, mirroring private financial institutions. It also seeks to improve identity verification processes for online account enrollment.
Reduce Average Time to Resolve Identity Theft Victim Assistance Cases From Nearly Two Years to Four Months (Objective 3): This objective directly targets the "glacial pace" of IDTVA case resolution, with a goal to reduce average processing time to 120 days by the end of CY 2025 and 90 days or less by the end of CY 2026.
Complete Processing of All Employee Retention Credit Claims and Ensure Taxpayer Rights Are Protected (Objective 6): This objective aims to expedite the processing of the remaining ERC claims by the end of CY 2025 and ensure clear communication and protection of taxpayer rights throughout the process.

Future Outlook for the 2026 Filing Season

Looking ahead, the report warns that taxpayers may face more challenges in the 2026 filing season. Potential legislative changes, such as the "One Big Beautiful Bill Act," could retroactively affect the 2025 tax year, requiring the IRS to quickly update forms and programming, which is likely to increase call volumes. The significant reduction in the IRS workforce (over 25%) also has the potential to reduce taxpayer services.

The National Taxpayer Advocate stresses the importance of early preparation, including lifting the hiring freeze, providing Direct Hire Authority for Taxpayer Services to hire essential employees (CSRs and Submission Processing employees) by the end of summer, and ensuring they receive adequate training. It is crucial that the IRS matches technology upgrades with planning, testing, and sufficient staffing capacity to avoid repeating past mistakes, such as the "tax season from hell" in 1985 or the pandemic-era backlogs. The IRS must continue to modernize its IT systems, with a particular focus on robust online accounts, digitization of all paper, and implementation of an enterprise case management system to ensure that all taxpayer information is accessible in one place for IRS employees.

TAS Systemic Advocacy Objectives (FY 2026)

The TAS Systemic Advocacy Objectives for Fiscal Year 2026 are specifically designed to address the identified challenges, aiming to influence tax administration and enhance the taxpayer experience. These objectives largely align with Goal Three: Influence on Tax Administration of TAS's Strategic Plan.

Improve Automation and Metrics to Enhance the Taxpayer Experience: This objective directly tackles the problems with paper processing and the limitations of the current LOS metric. TAS advocates for:
- End-to-End Paperless Processing: Moving beyond just digital submission (like the DUT) to full electronic processing from intake to resolution, where digitized data is compatible with IRS systems for automated routing and work assignment. The National Taxpayer Advocate has consistently referred to "paper as the IRS's kryptonite".
- Enhanced Metrics for Phone Service: Adopting measures like the "Service Completion Rate" that evaluate the overall taxpayer experience, including the quality, accuracy, timeliness, and resolution of service, rather than just call connection rates.
- Prioritizing Taxpayer 360 Implementation: Expediting the deployment of this integrated case management system to provide CSRs with comprehensive taxpayer data from a single platform, reducing delays and improving efficiency.
Expand IRS Online Account Functionality: This objective aims to address the existing gaps in online self-service tools and the challenges taxpayers face with identity verification for online accounts. TAS recommends:
- Broadening Online Account Capabilities: Expanding features within individual, business, and tax professional online accounts to include secure messaging, expanded transcript access, and issue resolution.
- Improving Identity Verification Processes: Analyzing the root causes of online identity verification failures and implementing strategies to mitigate them, providing clear alternative verification methods. This supports a "digital first" approach, aiming to allow taxpayers to conduct all transactions with the IRS via online accounts, similar to private financial institutions.
Reduce Average Time to Resolve Identity Theft Victim Assistance Cases From Nearly Two Years to Four Months: This objective directly targets the "unacceptably long" processing times for IDTVA cases (currently averaging 602 days) and the large backlog. TAS advocates for:
- Prioritizing Timely Resolution: Immediately establishing criteria to identify and expedite IDTVA cases with potential refunds, focusing on victims most at risk of financial harm.
- Setting Timely Processing Targets: Developing a plan to reduce average processing time to 120 days by the end of CY 2025 and to 90 days or less by the end of CY 2026.
Strengthen IRS Oversight of Unethical Tax Return Preparers: This objective aims to protect taxpayers, particularly low-income individuals, from unscrupulous preparers who exploit them by manipulating credits and deductions. The ERC section of the filing season review implicitly highlights the negative consequences for taxpayers when claims are disallowed, which can stem from improper advice. TAS recommends:
- Improving Taxpayer Communication: Providing clear notices to taxpayers when refunds are held due to improper credits, with detailed instructions for resolution.
- Enacting Tax Preparer Legislation: Calling on Congress to establish minimum standards and continuing education requirements for all tax return preparers.
Expedite Resolution of Centralized Authorization File Number Suspensions to Protect Tax Professionals and Taxpayers: This objective addresses the significant challenges posed by the suspension of Centralized Authorization File (CAF) numbers, which prevent tax professionals from representing their clients, even when the practitioner is the victim of fraud. This impacts taxpayers' right to retained representation. TAS recommends:
- Issuing Interim CAF Numbers: Allowing practitioners to continue representation during fraud review.
- Improving Communication: Providing clear and timely information about the suspension process.
- Reviewing Policy: Exploring less disruptive alternatives for fraud prevention while safeguarding taxpayer representation rights.
Complete Processing of All Employee Retention Credit Claims and Ensure Taxpayer Rights Are Protected: This objective directly addresses the significant delays in processing ERC claims and the unclear communication, as detailed in the 2025 filing season review. TAS recommends:
- Completing Processing: Aiming to process all remaining ERC claims by the end of CY 2025.
- Prioritizing Hardship Cases: Focusing on claims from taxpayers facing financial hardship.
- Allocating Resources and Tracking Deadlines: Devoting resources to review responses to disallowance notices and tracking claims affected by the two-year statute of limitations, informing taxpayers of options to extend the deadline.

Other systemic advocacy objectives listed include improving responses to Freedom of Information Act (FOIA) requests, strengthening Appeals’ independence and operational efficiency, and improving the IRS’s criminal voluntary disclosure practice. These also represent areas where TAS will advocate for systemic improvements in tax administration.

TAS Research Objectives (FY 2026)

The TAS Research Objectives are specifically focused on understanding how IRS procedures affect taxpayers and their reactions to IRS actions, with the ultimate goal of improving IRS operations and assisting the IRS in balancing compliance and enforcement efforts with taxpayer rights, while also reducing taxpayer burden. For Fiscal Year 2026, TAS has scheduled two new research projects.

1. Explore Ways the IRS Can Use Modern Technology to Improve Taxpayer Service

Problem Description: The IRS receives approximately 100 million calls each year across its approximately 100 toll-free phone lines. The Accounts Management (AM) lines, which receive nearly 70 percent of Enterprise phone calls, showed that IRS customer service representatives (CSRs) answered only 32.1 percent of calls during the 2024 filing season, which further dropped to 24.4 percent after the filing season through September 30, 2024. This significantly lags behind state taxation agencies, where seven out of nine studied answered at least 71 percent of their calls. The average wait time on AM lines more than tripled, from 3.4 minutes to 12.6 minutes. While the IRS has begun exploring a new measure of service, the Service Completion Rate, to provide a holistic view of live assistance, its current Level of Service (LOS) metric is limited and potentially misleading. It primarily measures the percentage of callers reaching an assistor on AM lines (87% in FS 2025), but excludes calls routed to compliance functions, automated systems, or those dropped before reaching a queue. Critically, IRS employees only answered 32 percent of all incoming calls to AM lines in FS 2025.
What TAS Research Is Advocating For: TAS believes that the IRS can significantly improve its telephone service by leveraging artificial intelligence (AI) to effectively authenticate callers and address a broader range of taxpayer issues automatically. This would allow employees to focus on taxpayers who require personal assistance. TAS Research will assess how public and private entities are optimizing their telephone function logic to serve more callers through automated messages and/or faster routing to a live assistor, considering the impact on service quality.
Specific Activities: TAS Research will:
- Review automation strategies implemented by other public and private entities in their telephone operations, including call routing.
- Quantify the impact of these operational changes on customers served, time and money burden on the entity, issue resolution, and caller wait times.
- Identify opportunities for the IRS to implement similar automation technology strategies and conduct a potential cost/benefit analysis for implementation and its impact on service.

2. Study the Impact of the IRS’s Research, Applied Analytics, and Statistics Outreach to Increase Earned Income Tax Credit Participation by Eligible Taxpayers Without Children

Problem Description: The Earned Income Tax Credit (EITC) is a refundable tax credit for workers with low to moderate income. Despite its importance, many eligible taxpayers, particularly those without children, are often unaware of their eligibility and fail to claim the credit. The EITC also presents statutory complexities and concerns regarding error rates leading to improper payments.
What TAS Research Is Advocating For: This research objective focuses on the segment of EITC-eligible taxpayers who do not have children. In Summer 2023, the IRS's Research, Applied Analytics, and Statistics (RAAS) function conducted an outreach mailing study. They identified EITC-eligible taxpayers for tax year 2021 who did not claim the credit and sent them a CP27 notice, with an additional letter sent to 80,000 taxpayers (while 120,000 served as a control group) to notify them of potential eligibility and instructions on how to claim it. TAS's study will discuss the details of this RAAS mailing and report on the effectiveness of the outreach, also estimating the number of taxpayers who could benefit from such outreach.
Specific Activities: TAS Research will:
- Analyze the 2023 RAAS study and estimate the impact on the treated group.
- Conduct a cost-benefit analysis on "No Child EITC-Eligible" taxpayers and the impact of sending an additional outreach letter if they do not respond to the initial CP27 notice.
- Conduct a cost-benefit analysis on "No Child EITC-Eligible" taxpayers and the impact of a potential policy that would automatically issue the EITC to the taxpayer instead of a CP27 notice. This analysis will consider whether the IRS has sufficient information for reliable eligibility determination through automation and the additional efforts needed to process amended returns.

Broader Context within the National Taxpayer Advocate's FY 2026 Objectives Report

These TAS Research Objectives are integral to the overall mission outlined in the National Taxpayer Advocate's FY 2026 Objectives Report to Congress. They align with Goal Three: Influence on Tax Administration of TAS's Strategic Plan, which aims to champion taxpayers and taxpayer rights by influencing tax law and policies and resolving systemic issues.

The research into improving telephone service through modern technology directly addresses systemic issues identified in the 2025 filing season review, where limitations of the LOS metric, low service levels on non-AM lines (like the Taxpayer Protection Program and Installment Agreement/Balance Due lines), and inefficient manual processing were highlighted. This objective also supports the broader report's call for end-to-end paperless processing, enhanced online account functionality, and the implementation of an integrated case management system (Taxpayer 360), all of which aim to reduce reliance on phone support and improve the overall taxpayer experience. The report emphasizes a "digital first" approach, advocating for robust online accounts and tools to provide convenience and efficiency, while still preserving non-digital options for those who need them. The research into technology directly informs this strategic direction.

Similarly, the research on EITC participation ties into the overall objective of protecting taxpayer rights and ensuring taxpayers receive the credits they are entitled to. This aligns with TAS's broader concern for vulnerable populations, as highlighted by the disproportionate impact of Identity Theft Victim Assistance (IDTVA) delays on low-income taxpayers. It also implicitly supports the objective of strengthening IRS oversight of unethical tax return preparers, as unscrupulous preparers often target eligible taxpayers for credits like the EITC. The research aims to explore proactive ways the IRS can ensure eligible taxpayers receive their due credits, reducing the potential for errors or the need for them to interact with potentially unethical preparers.

The report also emphasizes the need for sustained IRS technology investment to modernize its antiquated IT systems, some dating back to the 1960s. It explicitly states that modernization should not just replicate paper processes digitally but should rethink processes to leverage new capabilities, ensuring the IT function works hand-in-hand with Business Operating Divisions. The research objectives contribute to this by exploring how technology can fundamentally improve core IRS functions like telephone service and EITC administration, ultimately contributing to a more effective and efficient tax system.

In essence, the TAS Research Objectives (FY 2026) serve as foundational inquiries into critical areas of tax administration – taxpayer service and EITC compliance – directly supporting the broader National Taxpayer Advocate's Fiscal Year 2026 Objectives Report to Congress by seeking data-driven solutions to persistent systemic challenges and aiming to enhance the taxpayer experience, particularly amidst ongoing IRS workforce reductions and a push for modernization.

Conclusion and Future Outlook

The review of the 2025 filing season serves as the crucial foundation for the National Taxpayer Advocate's FY 2026 Objectives Report. While the IRS demonstrated notable progress in 2025 due to advance planning, no significant tax law changes in 2024, and a large workforce, the report warns of potential future challenges for the 2026 filing season. These include the possibility of new tax legislation that could retroactively affect the 2025 tax year, requiring rapid updates to forms and programming, and the significant reduction of over 25 percent in the IRS workforce.

The objectives outlined by TAS for FY 2026 emphasize the need for continued investment in technology modernization, particularly robust online accounts, the digitization of all paper, and the implementation of an integrated case management system. The report stresses the importance of early preparation, including lifting hiring freezes and providing Direct Hire Authority for Taxpayer Services to ensure adequate staffing and training before the 2026 filing season begins, to avoid past issues like the "tax season from hell" in 1985 or the pandemic-era backlogs. By addressing the systemic problems identified in the 2025 filing season, TAS aims to transform the taxpayer experience and uphold taxpayer rights.

Prepared with assistance from NotebookLM.