IRS report flags 2026 filing gains, refund delays and 2027 priorities

Traders Union
All News
Financial News
IRS 2026 filing gains & delays

Highlights

IRS processed about 139 million Forms 1040 in 2026 with 98% electronically filed, and roughly 65% generating refunds, mostly via direct deposit.
More than 14 million returns were suspended for review and over one million taxpayers experienced refund delays averaging five and a half weeks, with unbanked and vulnerable groups heavily affected.
Over half a million identity theft cases remained pending at season-end, some exceeding two-year wait times for refunds, prompting the Advocate to prioritize reducing such delays in 2027 objectives.

Filing season results and modernization progress

As reported by the Internal Revenue Service, National Taxpayer Advocate Erin M. Collins releases her Fiscal Year 2027 Objectives Report to Congress on June 24, outlining a broadly effective 2026 filing season alongside operational weaknesses that continue to burden some taxpayers.

The report says the IRS processes about 139 million Forms 1040 by the end of the filing season, with roughly 98% submitted electronically. About 65% of those returns generate refunds, and around 98% of refunds are delivered through direct deposit, allowing most returns to move through automated systems without delay.

It also credits continuing technology upgrades for much of that performance. Taxpayers log into Individual Online Accounts nearly 121 million times during the filing season, use them to retrieve tax records more than 3.7 million times, and gain expanded functions including document uploads, refund status notifications, and some direct deposit updates.

Refund-tracking tools also see heavy use, with taxpayers checking the IRS Where's My Refund? system about 346 million times, up 9% from the prior year. Collins says the agency performs better than expected in most respects, even as taxpayers who need direct assistance often struggle to get it.

Service gaps, refund holds and 2027 advocacy goals

Despite the overall results, the report says millions of taxpayers still face frustrating delays and limited access to support. More than 14 million individual income tax returns are suspended during processing for additional review, and more than one million taxpayers wait beyond the IRS's normal processing window for refunds, with an average delay of about five and a half weeks.

Lower-income, unbanked, elderly and overseas taxpayers are among those most affected by the federal push toward electronic payments under Executive Order 14247. The report says the IRS does not establish clear procedures for millions of taxpayers who cannot readily receive direct deposits, contributing to confusion and paper check delays of six weeks or more.

Identity theft cases remain another major pressure point. By the end of the filing season, more than half a million cases are still pending because of IRS delays, and some affected taxpayers wait close to two years for refunds.

The report also revisits staffing and service trade-offs in the Accounts Management function, where employees answer calls and process correspondence. Collins says earlier service targets contributed to more than a million hours of annual idle phone time and larger paper backlogs, and she supports modestly lower call-service targets to help resolve account issues faster.

Looking ahead, the Advocate sets out 11 objectives for the next fiscal year, including strengthening taxpayer rights, cutting identity theft case delays, and improving communication and processing options as the IRS continues its technology modernization.

In our earlier article, we summarized National Taxpayer Advocate Erin M. Collins’ mid-year update on the IRS’s 2026 filing season, noting that the agency processed nearly 139 million individual returns and issued tens of millions of refunds as electronic filing and automated workflows handled most cases smoothly. We also highlighted that, despite modernization gains and heavy use of online tools, taxpayers needing extra review or direct assistance—such as identity theft victims and those without reliable digital access—continued to face delays and service gaps.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.