How IRS Layoffs Could Delay Your Tax Refund and Increase Audit Risks

The IRS has an important job handling the nation’s tax system. But with current layoffs and short staffing, a lot of taxpayers are asking themselves: How is this going to affect refunds and audits? If you’re counting on a refund or hoping to avoid an audit, knowing how these IRS changes will affect you is more relevant than ever. Let’s analyze.

What’s Behind the Recent IRS Layoffs?

The IRS has been facing continuous budget reductions and dwindling workforce in the past few years. As per a report by the Treasury Inspector General for Tax Administration (TIGTA), the IRS workforce dwindled by almost 20% between the last decade. During 2023 alone, the agency lost thousands of skilled employees as a result of retirements and funding restrictions.

These job losses come at a time when the IRS needs to do more than ever—enforcing the tax code, processing returns, responding to taxpayer inquiries, and auditing returns. The impact of IRS Layoffs Tax Refunds Audits is already being felt, with delays and errors increasing in frequency.

How IRS Layoffs Are Slowing Down Tax Refund Processing

You might already know it if you’re expecting a refund. IRS layoffs have created serious slowdowns in processing return times.

Here are a few of the most important effects:

• In 2024, the IRS processed electronically filed returns in an average of 21 days, compared to 14 days in prior years.
• For paper returns, processing times increased to 10 weeks or more.
• Millions of returns were held up for manual review because of errors or identity verification requirements, and there just weren’t enough workers to keep pace.

This is to say that even if you filed early and accurately, your refund may still be delayed because of internal staffing deficiencies.

Delays in Tax Refunds: What to Expect in 2025

The future in 2025 is not much brighter. Unless the IRS gets major new funding or staffing assistance, taxpayers can expect longer delays.

Here’s what to expect:

• Longer wait times for refunds, even for electronic filers.
• Additional errors and corrections, particularly if computer systems misread information.
• Delayed notification from the IRS regarding return status or lost documents.

In short, patience will be paramount in 2025. The sooner and more precisely you file, the greater your chances of receiving your refund on time.

IRS Layoffs and the Rising Risk of Tax Audits

It may sound counterintuitive that fewer workers would translate into fewer audits—but that’s not quite how the math works. Rather, the IRS is relying on computer audit tools and algorithms to identify targets for audit.

Here’s why that’s significant:

• The IRS audited 626,204 returns in 2023, and many of them were flagged by computers, not humans.
• Low-income earners were audited more than some high-income earners because automated systems targeted Earned Income Tax Credit (EITC) claims.
• With fewer workers to conduct in-depth reviews, the agency might increasingly depend on automated audits in the future.

Are You More Likely to Be Audited Now?

If you’re a simple wage earner with uncomplicated taxes, the risk of an audit is relatively low. But if you’re taking specific credits, reporting self-employment income, or submitting a complicated return, the risk increases.

And because audits are now more and more algorithm-driven, even tiny mistakes or abnormal activity may flag your return. IRS layoffs also result in fewer second reviews and greater dependence on technology.

How to Protect Yourself During IRS Workforce Cuts

Although you can’t do anything about IRS staffing, you can do something to protect yourself:

• File early to get ahead of the backlog.
• Double-check your return for accuracy.
• Keep clear records of income, deductions, and credits.
• Use direct deposit for quicker refunds.
• Avoid red flags, like big deductions that aren’t well-documented.

Common Taxpayer Mistakes That Could Trigger an Audit

Even innocent errors can get you into trouble. Some of the most common are:

• Math mistakes or mismatched numbers
• Incorrect Social Security numbers
• Not reporting all income (including gig work)
• Misreporting deductions or claiming ineligible credits

With IRS cuts reducing the agency’s capacity to manually review and clarify, these problems are more likely to trigger an audit notice.

IRS Backlogs and Customer Service Challenges

Attempting to call the IRS recently? Good luck. With fewer workers on hand, phone hold times have blown up.

• In 2023, just 17% of taxpayer calls made it to a live agent.
• Average wait times were over 25 minutes, and numerous taxpayers were hung up on before receiving assistance.

Online resources are getting better, but they can’t substitute the comfort of talking to a live person when you have a serious tax problem.

What This Means for Tax Professionals and Accountants

Tax professionals are feeling the squeeze as well. With more clients facing delays or being flagged for audits, accountants are devoting more time to follow-ups and correction requests.

Many professionals recommend:

• Filing returns well before deadlines
• Providing extra documentation with complex returns
• Monitoring refund status proactively

The IRS layoffs are pushing tax professionals to be more thorough and cautious than ever.

Final Thoughts

The IRS is in a tough spot. Layoffs and budget issues are stretching the agency thin, which means delays and risks for taxpayers are on the rise. But that doesn’t mean you’re powerless.

File early, remain precise, and have your papers in order. These little steps can save you a great deal of stress later on. As the landscape continues to change, being proactive is the best defense.

Remember, when it comes to IRS Layoffs Tax Refunds Audits, a little preparation goes a long way.

FAQ’s

Why is my tax refund taking longer this year?

IRS staffing shortages and heavy return volumes are resulting in substantial processing delays.

Will IRS layoffs reduce the number of audits?

Not really, Although there are fewer people to work with, the IRS is employing more automated audit systems.

How can I avoid an IRS audit during this time?

File correctly, stay away from red flags, and have clear records of all income and deductions.

Are paper tax returns more affected by delays?

Yes, Paper returns take much longer to process due to manual handling and staff shortages.