Holy Cannoli: Why 2026 Will Be the Most Chaotic Filing Season (And What It Means for You)
Friends, grab your espresso—because we need to have a serious conversation about what’s actually happening with the IRS right now. And I’m going to be straight with you: the system that processes your taxes is literally falling apart.
I’ve been doing this a long time and, I have never seen the IRS this unprepared to actually function. Not during the pandemic. Not during the 2008 financial crisis. Not ever.
This matters to you because when the IRS breaks, your taxes become complicated. Understanding what’s happening and why will help you navigate it.
Let me explain what’s actually going on and why it’s not just “delays.”
The Perfect Storm: Why the IRS Is Crumbling Right Now
The Long Decay: 40 Years of Underfunding and Neglect
Before we talk about the current crisis, understand this: the IRS has been systematically starved of resources for four decades. While every other federal agency modernized their technology, the IRS is still running computers from the 1980s and 1990s. Their systems literally cannot talk to each other. They process tax returns with software that’s older than the internet as we know it.
In 2010, Congress started cutting IRS funding. Then 2013. Then 2015. Then 2019. By 2022, the IRS had 28% fewer employees than they did in 2010 —despite a significantly larger taxpayer base and a massively more complex tax code.
The IRS was already drowning. Then everything got worse at once.
- Congress Just Rewrote the Entire Tax Code (And the IRS Has No Infrastructure to Handle It)
On July 4, 2025, Congress signed the One Big Beautiful Bill Act (OBBA) into law. This wasn’t a minor tweak. This was a fundamental rewrite of major parts of the tax code. We’re talking about:
- Estate tax exemptions jumping to $15 million per person
- New deductions for tip income, permanent senior deductions
- Modifications to charitable giving, Child Tax Credit, Opportunity Zones
- Changes to business deductions and standard deductions
Now here’s the problem: the IRS has to reprogram ancient computer systems to handle all of this. These aren’t systems from 2015. These are systems from the 1980s that have been patched and modified a thousand times. They’re fragile. They’re not designed for massive changes.
The IRS has to:
- Update their core processing systems to handle new tax computations
- Create new guidance for taxpayers and professionals
- Train staff on rules that literally didn’t exist three months ago
- Reprogram their matching systems (the computers that verify your income matches what your employer reported)
- Update their refund systems to handle new credit calculations
All of this with systems that are fundamentally broken and a workforce that’s about to shrink by 25%.
The IRS’s own projections show they won’t implement these changes smoothly. What that means: expect incorrect notices, processing errors, misclassified returns, and delays on anything outside the most basic filing.
- They Lost a QUARTER of Their Workforce—and All the Right People Left First
Here’s the real kicker: the IRS didn’t just lose employees randomly. Starting in late 2024, when layoffs looked likely, the best and brightest started jumping ship immediately. These are people with 20, 30 years of experience. These are the auditors, the technicians, the supervisors who actually know how things work.
By mid-2025, they were gone.
The numbers are staggering:
- 26,000+ employees eliminated (25% of their entire workforce)
- 21% of frontline tax processing staff gone
- 59% of their IT personnel eliminated (the people who maintain those ancient computer systems)
- Experienced auditors, managers, and subject matter experts walked out the door
When you lose the experienced people, the system doesn’t just slow down. It breaks differently. New hires make mistakes experienced people would catch. Systems aren’t maintained properly. Knowledge gets lost.
Think about what it means operationally: if 21% of the people processing returns are gone, and they’re replaced by brand-new hires who don’t know the job, processing time doesn’t just increase 21%. It multiplies.
- A 43-Day Government Shutdown Killed Preparation (Right Before Filing Season)
And then, October 1 – November 12, 2025: a 43-day government shutdown. During that time:
- 35,000 IRS employees were sent home (most without pay)
- All taxpayer assistance centers closed completely
- Zero mail processing happened
- Zero training of new staff occurred
- Zero preparation for filing season happened
Think about the timing. Filing season ramps up in January and goes full-throttle from February through April. October and November are supposed to be when the IRS trains new employees, tests systems, and prepares infrastructure.
Instead, they were closed.
The shutdown ended November 12. Filing season starts January 24. That’s 10 weeks to:
- Bring 35,000 people back to work
- Get systems running again
- Train new hires on OBBA changes they just learned
- Catch up on the massive pile of 2025 mail that sat unopened for 43 days
- Process the returns that came in during the shutdown
- Get infrastructure ready for 2026 returns
With 25% fewer experienced people than they had last year.
It’s not possible. The math doesn’t work.
Here’s What This Actually Means for Your 2026 Tax Filing
Processing Will Be Significantly Slower—And Errors Will Be More Common
When you file your 2025 tax return in 2026, understand what’s happening on the other end:
The IRS will scan it, enter data into systems that can’t properly handle the new OBBA rules, and process it through an organization that’s understaffed, undertrained, and using outdated technology.
Expect:
- Longer processing times (we’re not talking about weeks—think months for anything that doesn’t fit a standard pattern)
- More incorrect notices (the IRS will send you letters saying you owe money, or asking for clarification, on things that are technically correct on your return)
- More mismatches (your W-2 didn’t match their records, your 1099 data got entered wrong, your business income didn’t reconcile)
- Slower resolution times (fixing a mistake that used to take 90 days could take 6 months or more)
You Can’t Rely on Customer Service
The Treasury Inspector General warned Congress that IRS customer service could drop from 85% (already bad) to just 16%. That means if you call with a question, there’s an 84% chance you won’t reach anyone.
Here’s what that means practically:
- If you filed something unusual and they send you a notice, you might not be able to call and clarify
- If there’s an error on your return, reaching the IRS to fix it becomes extremely difficult
- If you’re trying to qualify for a new credit or deduction under OBBA and need guidance, you’re on your own
“Compliance Risk” Gets Real in a Different Way
With fewer auditors and more processing errors, here’s what happens:
The IRS makes mistakes. They send incorrect notices. They disallow deductions they should allow. They over compute your taxes.
Normally, you’d get a notice, call them, explain the situation, and they’d fix it. Not anymore. You’re stuck either accepting an incorrect determination or fighting through their broken system to prove you’re right.
And here’s the thing: if you don’t respond correctly to an IRS notice, or you miss a deadline, or you don’t have perfect documentation, the IRS will assume they’re right.
Your documentation has to be airtight. Your return has to be defensible. You can’t assume “we’ll clear this up later.”
The New Tax Code Creates Processing Complexity (Beyond Just “It’s New”)
The OBBA rules interact with existing tax law in ways that are genuinely complicated. Here’s an example: the new $15 million estate tax exemption interacts with prior year carryovers in specific ways. The new charitable deduction rules interact with the Alternative Minimum Tax. The new Opportunity Zone rules interact with real estate tax treatment.
These interactions have to be programmed into the IRS’s systems correctly. And these systems are fragile.
When the IRS’s computers misapply these rules, you get an incorrect refund calculation, an incorrect notice, or a notice asking for clarification on something you filed correctly.
The IRS’s staff also has to apply these rules correctly. But they’re new employees, trained in a rush, using systems they don’t fully understand, applying rules they just learned.
Errors become more likely. Processing becomes slower.
What This Means for Your Filing in 2026
File Electronically—No Exceptions
Paper returns go into a physical mail processing system that’s already backed up and now even more understaffed. Electronic returns get processed by computers, which is faster and more reliable (relatively speaking, given the circumstances).
If you file paper, expect your return to sit in a pile for months before anyone even opens it.
If You’re Expecting a Refund, Adjust Your Timeline
Normally, you might get a refund within a few weeks of filing. Add several months to that timeline. August or September for refunds is becoming realistic. Don’t make financial decisions assuming you’ll get your refund in April.
If You Paid Quarterly Estimated Taxes, Make Sure They’re Documented Correctly
With the new rules, quarterly estimated tax calculations got more complicated for some people. Make sure your estimated tax payments are properly credited. If they’re not applied correctly, you’ll get an incorrect notice. Fixing it will take forever. Always make payments electronically.
If Anything on Your Return is Non-Standard, Expect Questions
New business structure? Different deduction than last year? First time using a new credit? You’re more likely to get an IRS notice.
Have documentation. Don’t assume you can explain it later. Assume you’ll need to respond in writing.
Amended Returns Are Going to Take a Really Long Time
If you filed your 2024 return and discover you need to amend it, understand that amended returns go to the back of the line. Processing times that used to be 6-8 months are now 12-18 months, maybe longer. This will be a problem for the new R&D rules that require an amendment.
Don’t file something incorrect hoping you’ll just amend it later. Get it right the first time.
The Bigger Picture: This Affects Your Entire Tax Situation
The filing challenges aren’t just about delays. They’re about a system that’s less reliable. When a system is less reliable, you have to be more careful, more thorough, and more strategic about how you file and what you claim.
Years like this are when tax planning matters most—not because of aggressive strategy, but because you need to be crystal clear about what’s defensible and what’s not. You need to anticipate how the IRS might interpret your return. You need documentation that speaks for itself.
These are the years when having professionals who understand both the law and the IRS’s practical limitations makes a real difference.
The Bottom Line
The 2026 filing season will be the most chaotic in decades. The IRS is unprepared. Their systems can’t handle the new law. Their staff is inexperienced. Their customer service will be nearly nonexistent.
Your filing won’t just take longer. It will be more complex to get right, riskier to get wrong, and harder to fix if something goes sideways.
Understanding what’s happening—why it’s happening—and what that means for how you file, what you claim, and how you document everything is essential.
This is the year to take filing seriously. Really seriously and bring extra patience.
Reach out to us at [email protected] if you want to talk through your specific situation and what you need to do to prepare. Ciao!
