IRS Can’t Keep Up: DOGE Cuts Lead to Tax Processing Backlog

As the tax season of 2025 unfolds, Americans are facing unprecedented challenges when it comes to their taxes. A massive backlog in tax processing, longer refund delays, and fewer options for customer support have caused widespread frustration among taxpayers. At the core of these issues is the Department of Government Efficiency’s (DOGE) sweeping layoffs and restructuring, led by tech entrepreneur Elon Musk. This significant disruption has left the IRS struggling to manage its operations and deliver services on time, impacting millions of American taxpayers.

The DOGE initiative, originally designed to reduce “bureaucratic bloat” in federal agencies, has had the unintended consequence of crippling the IRS’s ability to function effectively. With millions of taxpayers waiting for refunds, assistance, and audit resolutions, the IRS’s current capacity is insufficient to handle the increased workload.

The DOGE Restructuring: What It Means for the IRS

The IRS, typically the backbone of federal tax collection and refund distribution, is undergoing a drastic transformation due to the DOGE layoffs. Elon Musk, in his leadership of DOGE, has pushed for a reduction in government employee numbers across multiple agencies, including the IRS. The rationale behind these cuts was to streamline operations and cut costs, but the execution has left the IRS severely understaffed and under-resourced.

By the end of 2025, it’s expected that the IRS workforce will shrink from nearly 100,000 employees to just 60,000 to 70,000. This reduction is largely due to the voluntary buyouts taken by 22,000 IRS workers and the termination of 7,000 probationary staff members. With fewer employees, the IRS is struggling to keep up with the high volume of tax returns, leading to significant delays in processing and refunds.

Moreover, the shutdown of the Direct File program, a free government-run tax filing tool, has further exacerbated the situation. Initially introduced in 2024, Direct File was a popular option for taxpayers seeking an easy, no-cost filing method. However, due to financial cutbacks and lobbying from private tax preparers, the program was defunded in early 2025, forcing taxpayers to rely on third-party software or paper filing, which only adds to the delays.

A Timeline of the IRS Crisis in 2025

Here’s a breakdown of key events in the ongoing crisis affecting the IRS in 2025:

These events have culminated in an environment where taxpayers are feeling the full weight of the IRS’s reduced capacity.

How the IRS Backlog Affects Taxpayers

For taxpayers trying to navigate their obligations in 2025, these disruptions can create significant challenges. Here’s what you can expect:

1. Delayed Refunds
   The IRS is struggling to process returns efficiently, especially for complex filings or paper-based returns. Refund delays have become the norm, with some taxpayers waiting up to 12 weeks or more for their refunds.

2. Limited Access to Customer Service
   With reduced staff, the IRS’s customer service has been overwhelmed. Call centers are experiencing record-high wait times, making it difficult for individuals to get answers or resolve issues promptly.

3. Audit Closures and Increased Risk of Errors
   Fewer auditors mean that audits are being prematurely closed, leaving some incorrect tax filings unexamined. While this might benefit non-compliant taxpayers in the short term, it erodes trust in the system and could lead to greater tax evasion.

4. Diminished Free Filing Options
   The termination of Direct File has made it harder for individuals to file their taxes for free. Now, many taxpayers must turn to private tax services, which could add financial strain, especially for low-income households.

Expert Opinions: A Growing Crisis for the IRS

Many experts are voicing concerns about the long-term consequences of these cuts. The National Treasury Employees Union (NTEU) has warned that the restructuring plan could cost the government billions in lost tax revenue. According to NTEU President Doreen Greenwald, “Cutting IRS staff doesn’t just save money—it costs the government billions in uncollected taxes.”

Economists are also predicting significant impacts in 2026, with estimates suggesting a revenue shortfall of $6.8 billion due to reduced audits and inefficiency. Former National Taxpayer Advocate Nina Olson emphasized that the consequences of these cuts go beyond operational difficulties, threatening the nation’s ability to fund essential public services.

How to Protect Yourself During the 2025 Tax Season

As the IRS faces these challenges, it’s important to take proactive steps to protect yourself and avoid unnecessary delays or complications with your taxes:

1. File Early and Electronically
   Electronic filing is processed much faster and with fewer errors than paper filing. The sooner you submit your return, the sooner your refund will be processed (assuming there are no issues).

2. Use IRS Online Tools
   Make use of tools like the “Where’s My Refund?” feature on IRS.gov to stay updated on the status of your return. You can also access tax calculators and payment portals to assist with your filing.

3. Ensure Accuracy
   With fewer audits, mistakes on tax returns may go unnoticed for longer periods. Be sure to double-check everything to avoid errors that could lead to penalties down the road.

4. Consider Professional Help
   If your tax situation is complicated, hiring a certified public accountant (CPA) or an enrolled agent can help ensure your taxes are filed accurately and in compliance with current regulations.

Long-Term Impact on the Tax System

The long-term effects of these cuts are still unfolding, but the consequences could be far-reaching. Here are some of the potential outcomes:

• Decreased Taxpayer Compliance
  With fewer audits, many taxpayers may feel emboldened to take risks and underreport their income or deductions. Over time, this could erode the voluntary compliance rate, making it harder for the IRS to collect taxes.

• Widening Wealth Inequality
  The lack of IRS resources may disproportionately benefit the wealthiest individuals, who often use sophisticated tax strategies that are harder for the IRS to scrutinize without adequate staffing.

• Reduced Government Funding
  The IRS’s diminished ability to collect taxes could lead to reduced funding for critical government programs such as Social Security, healthcare, and infrastructure.

FAQ

How long will it take to get my tax refund in 2025?

Expect delays of up to 12 weeks for refunds, especially if you filed a paper return or your return is complex.

Can I still file my taxes for free in 2025?

Unfortunately, the Direct File program has been discontinued. However, you can still use other IRS tools, though many taxpayers will need to turn to third-party tax services for filing.

What should I do if I can’t reach the IRS by phone?

Be patient and try again at different times. Additionally, make use of online IRS tools to track your refund status or access necessary forms.

How will the layoffs impact audits?

With fewer IRS agents, audits will be less frequent, and some audits may be prematurely closed. This could lead to more tax returns going unexamined.

Is it too late to file taxes early?

It’s never too late to file early! The sooner you file, the sooner your return is processed, and the less likely you are to face delays.

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