In her Annual Report to Congress, Erin Collins, the National Taxpayer Advocate, noted that “taxpayers ultimately judge the tax system the same way they judge any essential public service—by whether it works when they need it.”
The report cites several challenges for taxpayers, including the IRS’s 27% reduction in its workforce, leadership turnover, and the implementation of extensive and complex tax law changes mandated by the One Big Beautiful Bill Act (OBBBA)—many of which, Collins notes, apply retroactively and require significant IRS programming, guidance, changes to tax forms and instructions, and taxpayer education. How those challenges affect taxpayers is what everyone is watching for this tax season.
As required by law, Collins’ report identifies and discusses what she believes were the ten most serious problems taxpayers faced in their dealings with the IRS during fiscal year 2025, and offers administrative and legislative recommendations to mitigate these problems and improve the taxpayer experience.
Here’s a look.
Ten Most Serious Problems for Taxpayers
Across the ten most serious problems, a common pattern emerges: Taxpayers are trying to do the right thing, but the IRS’s processes often make it confusing, slow, or risky to do so.
#1 Amended Returns
Take amended returns, which the Advocate identifies as one of the most acute and persistent problems. Congress allows taxpayers to correct mistakes or claim refunds they are legally entitled to by filing an amended return. It should be straightforward. But the report makes clear that amended returns—especially business amended returns—can sit in limbo for months or even more than a year. In fiscal year 2025, individuals waited an average of five months, while businesses waited an average of 13 months. Amended returns that require a more comprehensive review by the IRS’s Exam function took even longer. In FY 2025 through August 22, 2025, the Small Business/Self-Employed Division’s Exam function required an average of 435 days to review and close 6,772 individual amended return claims.
What troubles C0llins—and many tax practitioners—most is not just the delay, but the way the IRS communicates during it. Notices are often difficult to understand or fail to clearly explain appeal rights and deadlines. As a result, taxpayers can miss opportunities to challenge an adverse decision simply because they were not adequately informed.
That theme of unclear communication shows up repeatedly. IRS notices—especially those involving claim disallowances—too often fail to explain what the IRS did, why it did it, and what the taxpayer can do next. From Collins’ perspective, this is more than a formatting issue; it is a due-process problem. A taxpayer cannot meaningfully challenge the IRS if they are not sure what they are arguing.
#2 IRS Modernization and Digitalization
Technology and modernization are another major thread in the report. The IRS continues to rely heavily on paper processing for returns, correspondence, and internal workflows, resulting in delays, errors, and backlogs. In 2025, the IRS received tens of millions of paper-filed returns and tens of millions of pieces of paper correspondence. The Government Accountability Office (GAO) reported that during the 2024 filing season, the IRS did not meet its 13-day processing goal for individual paper returns, instead averaging 20 days, and that similar problems persisted from prior seasons.
Collins acknowledges the IRS’s commitment to digitization but warns that modernization efforts have been slow, uneven, and sometimes poorly integrated. Manual transcription of data remains common, increasing the risk of error and rework. Outsourcing and automation raise additional concerns about oversight, data security, and quality control. Poorly executed modernization, she warns, can create new problems rather than solve old ones.
#3 Telephones
In fiscal year 2025, taxpayers placed almost 104 million calls, and customer service representatives answered only about 30 million of them. Most of the calls were made to the Accounts Management, which handles refunds, notices, payment issues, and account discrepancies—the IRS received more than 70 million calls on those lines, with about 19 million answered by representatives. Being told that “60 percent of calls were answered” does not feel accurate when three-quarters of callers never speak to anyone. And even when taxpayers reach a representative, a resolution is not guaranteed.
(A report from the Treasury Inspector General for Tax Administration also found room for improvement in IRS telephone access and reporting of wait times.)
Compounding the problem, those Accounts Management representatives sat idle for approximately 1.3 million hours because they cannot perform other work—such as processing paper submissions—while waiting for incoming calls. This results in longer delays for taxpayers, not only on the phone but also in processing paper submissions and resolving account issues. It also highlights how current performance measures can distort resource allocation rather than promote efficiency, suggesting that the metrics should be changed.
#4 Office of Appeals
Concerns about access and independence also loom large, particularly with respect to the Independent Office of Appeals. Congress created Appeals to provide taxpayers a fair and impartial forum to resolve disputes without going to court. But the Advocate reports persistent delays (sometimes taking over a year to be heard), inconsistent practices, and training gaps that undermine confidence in the process. Of particular concern is the perception—and, in some cases, the reality—that Appeals is not always sufficiently independent of the IRS. When that happens, taxpayers can reasonably question whether they are receiving a truly impartial review.
#5 Tax Pro Accounts
The report highlights problems that disproportionately affect tax professionals and, by extension, the taxpayers they represent. Tax Pro Accounts hold promise but remain limited. For example, tax professionals cannot view notices sent to taxpayers or access key information return documents, such as Forms W-2 and many Forms 1099. This forces tax practitioners back to paper and phone channels that are already strained. (In FY 2025, the IRS Practitioner Priority Service line received over 5.7 million calls from practitioners, but assisters only answered about 57% of these calls.)
#6 Records Access
Taxpayers and their representatives often struggle to obtain records from the IRS. This lack of access leads to repeated calls, unnecessary correspondence, and confusion among IRS employees who may mistakenly believe confidentiality rules prevent disclosure. Timely access to records is essential for taxpayers to be informed, treated fairly, and able to exercise their rights.
One example occurred in January 2025. In response to executive orders from the Trump administration affecting language in government materials and policies, the IRS took down many online versions of documents, including sections of the IRM, to make updates. The IRS took months to modify and repost many of those documents, even though the executive order requirements did not affect most IRS procedures. Eleven months later, the Advocate noted that some material has not yet been restored. Although IRM provisions are not binding, they provide invaluable insight into IRS procedures, and tax professionals can use them to resolve account issues and disputes with the IRS by highlighting agency requirements. The Advocate has urged the IRS to repost any remaining materials as soon as possible, as required under the Freedom of Information Act (FOIA).
#7 Centralized Authorization File
The Centralized Authorization File (CAF) is the IRS’s system for recording and managing third-party authorizations, allowing tax professionals and other designees to represent taxpayers before the IRS. Once an authorization is recorded in CAF, the representative can access taxpayer information and communicate with the IRS on the taxpayer’s behalf.
The current system still relies heavily on manual processing, creating delays that expose taxpayers to missed deadlines, incorrect notices, and potential enforcement actions. Although digital tools have been introduced, further improvements are needed to ensure authorizations are processed quickly and reliably.
#8 Social Media
The Advocate notes that misinformation on social media—particularly involving tax credits—has driven waves of improper claims and subsequent enforcement actions. Taxpayers often rely on advice they believe is legitimate, only to face penalties, delays, or audits later.
The consequences can be devastating. For example, withdrawing retirement funds due to scams can lead to particularly harsh outcomes. If a scam victim is duped into taking a distribution from a retirement account before age 59½, in addition to paying tax on the taxable portion of the distribution, they will generally owe the 10% early-distribution tax because the law does not provide an exception for scam-related distributions. Even when all the distributed funds are stolen, the victim will generally still owe taxes on the distribution and may incur penalties and interest. These harsh outcomes raise serious concerns about equity and undermine confidence in the fairness of our tax system, particularly for taxpayers who acted in good faith and were victimized. The Advocate says Congress should consider addressing these draconian consequences in future legislation to better align the tax system with the fundamental rights of taxpayers.
(For a real-life example of how this impacts taxpayers, read this story.)
The complexity of the tax code can make it difficult to distinguish credible guidance from viral nonsense. The Advocate says the IRS needs to “fight fire with fire” and leverage its technology and its partnerships with the tax community and the public” to protect taxpayers from fraud and misinformation.
#9 Taxpayers Living Abroad
The report describes the compliance burden on U.S. citizens living abroad as exceptionally high, citing overlapping reporting requirements, tight deadlines, and severe penalties. An estimated 4.4 million U.S. citizens live abroad and many of them struggle to remain compliant despite good-faith efforts.
One relatively simple fix involves refunds. The IRS still sends paper checks to most international taxpayers. The Advocate says the IRS should expand the ability to make and receive payments electronically from taxpayers abroad, or consider other alternatives to encourage the transition away from paper checks. (Notably, this is already happening for taxpayers who live in the U.S.)
#10 International Withholding Relief
Taxpayers affected by programs such as the Foreign Investment in Real Property Tax Act (FIRPTA), U.S. residency certification, and Form 8233 face significant delays due to outdated, manual processes. There may be instances when withholding is required but the related returns or refund requests aren’t timely processed. The consequences include cash-flow disruptions (especially related to sales of real estate) and prolonged uncertainty. The Advocate urges the IRS to prioritize these programs and develop reliable electronic filing options.
Legislative Gains for Taxpayers
The Advocate did have some good news for taxpayers. Collins reported that in the final weeks of 2025, Congress enacted three recommendations from the National Taxpayer Advocate’s 2025 Purple Book. (The Advocate’s legislative recommendations are presented in the National Taxpayer Advocate 2026 Purple Book, Compilation of Legislative Recommendations to Strengthen Taxpayer Rights and Improve Tax Administration, commonly referred to as the Purple Book.)
Specifically, the IRS Math and Taxpayer Help Act significantly improves the clarity of math error notices, while the Disaster-Related Extension of Deadlines Act implements recommendations to prevent taxpayers from losing refunds due to deadline confusion and to prevent collection notices from being issued before the tax payment deadline. Both bills passed with unanimous bipartisan support.
The House has passed additional legislation drawn from the 2025 Purple Book, now pending in the Senate. H.R. 1152, the Electronic Filing and Payment Fairness Act, would extend the “mailbox rule” to electronically submitted documents and payments.
H.R. 5346, the Fair and Accountable IRS Reviews Act, would require supervisory approval of certain penalties before any written penalty notice is issued to a taxpayer. H.R. 5349, the Tax Court Improvement Act, would authorize Tax Court judges to sign subpoenas to facilitate discovery before scheduled hearings and allow exceptions to the 90-day deadline for filing a petition contesting a notice of deficiency for good cause, such as when a taxpayer misses the deadline due to a medical emergency.
The Senate Finance Committee has also focused on taxpayer rights. Chairman Crapo and Ranking Member Wyden released a discussion draft of a broad tax administration bill, the Taxpayer Assistance and Service Act, which contains more than 65 provisions—over half of which reflect the Advocate’s Purple Book recommendations. A bill is likely to be introduced in 2026.
About The Report
The report is one of two that the NTA delivers to Congress each year—one in January and another in June.
The NTA leads the Taxpayer Advocate Service (TAS) and delivers the reports to the Senate Finance Committee and the House Ways and Means Committee. Since TAS is an independent organization within the IRS, there is no prior review or comment from the IRS Commissioner, the IRS Oversight Board, the Treasury Secretary, any Treasury officer or employee, or the Office of Management and Budget.
You can read the 2026 report here (get comfy, it’s 220 pages long).
About TAS
While it feels like the TAS has been around forever, that’s not the case. An early version of the organization emerged in 1979, following the IRS’s creation of the Office of the Taxpayer Ombudsman, which was established as the IRS’s primary advocate for taxpayers. That office was eventually codified in the Technical and Miscellaneous Revenue Act of 1988. Nearly a decade later, in 1996, Congress officially created the Office of the Taxpayer Advocate, considered the “voice of the taxpayer.” At the same time, the new law tasked the Advocate with bringing two annual reports to Congress. Those reports are due June 30 (objectives of the Taxpayer Advocate for the coming fiscal year) and December 31 (includes a summary of at least 20 of the Most Serious Problems facing taxpayers) each year.
Today, there is at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico.
