How IRS Layoffs Might Affect Your Tax Refund’s Timing

Tax season is a high-stakes period for millions of Americans. This doesn’t come as a surprise given that 37% of Americans, including 50% of millennials, depend on tax refunds as a financial lifeline, according to a survey conducted by Qualtrics on behalf of Intuit Credit Karma and reported by KMSP-TV.

This year, a new challenge has emerged that could throw a wrench in the works: IRS layoffs. As President Donald Trump’s administration pushes ahead with significant staff cuts—already affecting thousands of workers—the question on many taxpayers’ mind is, “Where’s my refund?” The answer is complicated, as a reduced IRS workforce could slow processing times, lengthen hold times on customer service calls, and ultimately delay the arrival of your refund depending on how you file and how accurate your return is.

A New Reality For Tax Filers Asking ‘Where’s My Refund?’

The IRS has begun executing layoffs, with estimates of between 6,500 and 7,000 probationary employees being dismissed, the Washington Post reported. These cuts are part of a broader initiative to shrink the federal workforce, a move championed by the Trump administration and orchestrated through Elon Musk’s Department of Government Efficiency. While these layoffs target a fraction of the IRS’s roughly 84,000 employees, they predominantly affect those in the enforcement, collections, and certain self-employed divisions.

Former IRS Commissioner Charles Rettig recently weighed in on the matter, noting, “there should not be a significant impact on current filing season operations,” in a statement obtained by the Post. The cuts are primarily confined to probationary employees in the Small Business Self-Employed Division rather than those in the Wage and Investment Division that handles most taxpayer services. Yet, as tax expert Adam Brewer from AB Tax Law puts it, the reality is far more nuanced. “If you send in a paper return, at a minimum, someone at the IRS has to be there to open the envelope, and we saw in the pandemic that doesn’t get done when they get far behind. We’ve had situations where people send in payments, they never get cashed, and suddenly there’s additional penalties and interest,” Brewer explained in an article in The Hill.

IRS Layoff Implications For The ‘Where’s My Refund’ Question

The IRS maintains that if you file an accurate, electronically submitted return with direct deposit, the answer to ‘where’s my refund’ should be that will arrive in less than 21 days. But what happens when your return is flagged for manual review? Missing or incomplete information, discrepancies in personal details, or large refund amounts can trigger additional scrutiny—a process that, with a reduced workforce, might extend processing times significantly.

Experts warn that filing close to the deadline or submitting a return with errors is a recipe for delay. During tax season, IRS employees wear a lot of hats. Filing a paper return or having your return flagged will likely lead to longer wait times.

The impact of these layoffs is not limited to processing delays alone. Here’s what else might be in store:

• Extended Hold Times: With fewer IRS employees available to answer phone calls, you might be on hold for much longer when seeking assistance, U.S. News & World Report noted.. This can be especially problematic if you’re trying to resolve issues on the fly.
• Manual Processing Backlogs: Paper returns and flagged electronic submissions require manual review. During the pandemic, similar backlogs led to significant delays, and with staffing cuts, the risk of a “refund train wreck” increases, according to a press release by Senate Finance Committee Democrats .
• Increased Risk Of Errors: Fewer employees means that the IRS’ quality control and error-checking functions might suffer. This could result in mistakes that delay refunds or even cause incorrect payments.
• Delayed Payment Plans: For taxpayers who need to set up installment payment plans, the reduced capacity at the IRS could slow down the approval and processing of these arrangements.

‘Where’s My Refund?’ Here’s What Experts Are Saying

Experts emphasize the importance of filing early and accurately. “Make sure that their information is all accurate. Verify social security numbers for everybody in the family.” tax expert Tom O’Saben, director of tax content at the National Association of Tax Professionals, told Investopedia.

Likewise, Rettig’s statement reassured that the core operations might not be immediately affected. However, he acknowledged that the IRS’ overall capacity is being significantly reduced, which could have ripple effects as we approach the peak of tax season.

Northwestern University law professor Ari Glogower highlighted to Yahoo in an interview, that there are statutory protections for taxpayers who receive delayed refund payments. Specifically, the IRS has 45 days from the tax return date to issue a refund. “If they don’t, then the taxpayer may actually be entitled to interest on late refund payments,” he said.

Practical Steps For A Faster Answer To ‘Where’s My Refund?’

Here are some practical tips to help taxpayers navigate this turbulent tax season and and accelerate the timeline for your tax refund:

• File Early, File Electronically: The sooner you file, the less likely you will be caught in the IRS processing backlog. Moreover, remember that electronic filings are processed faster than paper returns, so take advantage of online tax software and direct deposit options.
• Double-Check Your Return: Accuracy is paramount. Review your tax return multiple times before submission to ensure all information is complete and correct. Avoiding errors minimizes the chance that your return will be flagged for manual review, which could significantly delay your refund.
• Use an Identity Protection PIN: Adding an IP PIN to your filing helps verify your identity and may prevent your return from being flagged for potential fraud. This extra layer of security could speed up processing times.
• Monitor Your Refund Status: Once you’ve filed, use the IRS “Where’s My Refund?” tool or the IRS2Go app to track the status of your refund.
• Seek Professional Assistance: Consider using a CPA or enrolled agent if your tax situation is complex. They can help guide you through any potential issues, especially if you encounter extended wait times due to staffing cuts.
• Keep Your Contact Information Up To Date: Ensure your mailing address, email, and phone number are current and on file with the IRS. This will help guarantee that you receive essential notifications promptly, reducing the risk of missing critical deadlines or alerts about your return status.

The Upshot For A ‘Where’s My Refund’ Answer

The best way to ensure you can quickly answer ‘where’s my refund’ is to file an early, electronic, and accurate tax return.