IRS watchdog says digital-first service left some filers behind

The IRS processed most 2026 tax returns successfully, but taxpayers whose cases fell outside automated processing often faced long delays and limited access to human help, the National Taxpayer Advocate said in a report released June 24, 2026.

The advocate’s Fiscal Year 2027 Objectives Report to Congress describes a mixed filing season. The IRS processed nearly 139 million individual returns and issued more than 90 million current-year refunds. About 98% of individual returns were filed electronically. About 98% of refunds were delivered by direct deposit, although the report notes that the IRS’s direct-deposit and refund totals are not directly comparable because they include different tax-year populations.

Those topline figures do not capture the experience of millions of people whose returns were suspended, whose refunds could not be sent electronically or whose cases required identity-theft assistance.

Where automated processing breaks down

More than 14 million individual returns were suspended during processing for additional review. A suspension is not, by itself, a finding of fraud or identity theft. It can mean that an IRS filter flagged a return and the agency needs more information or verification before releasing a refund.

More than 1 million taxpayers did not receive refunds within the IRS’s normal processing time. Those taxpayers waited an average of about 5.5 weeks, according to the report. Other taxpayers experienced shorter delays that remained within the agency’s normal time frame.

The delays can be financially significant for households relying on a refund for rent, groceries, medical bills or other expenses. The report says taxpayers who need individualized help often struggle more than those whose returns can be completed through automated systems.

Phone access was also uneven. Across IRS telephone lines, assistors answered about 21% of 48.1 million calls during the filing season, compared with 25% of calls in the prior filing season. The report says some high-volume lines performed particularly poorly, including the Taxpayer Protection Program line used by people whose returns were suspended because of suspected identity theft.

Why paper-refund recipients faced extra obstacles

The IRS generally shifted toward electronic payments during the filing season. That approach does not work for everyone. People who are unbanked or underbanked, some older taxpayers, certain taxpayers living overseas and others without practical access to electronic payments may need a paper check.

By April 27, the IRS had issued about 4 million notices involving returns that lacked valid direct-deposit information or contained incorrect information. The notices generally directed taxpayers to use an online account to update payment information or request an exception for a paper check.

The National Taxpayer Advocate said the process was confusing because many taxpayers did not have online accounts or could not create them. The notices also did not clearly provide all the information needed to request an exception. The report says paper-refund problems caused delays of six weeks or more in some cases.

Identity-theft cases can take nearly two years

Identity-theft cases remained one of the most serious service problems. More than 500,000 cases were still pending at the end of the filing season, and the average resolution period was about 20 months.

That is an average, not a guaranteed wait for every taxpayer. But the backlog can leave affected households waiting for refunds long after ordinary processing timelines have passed.

Taxpayers who receive a CP5071-series notice or Letter 5447C should follow the instructions on the notice and use the official IRS verification service when available. The IRS says taxpayers should have the notice and the relevant Form 1040 return available. After verification, the agency says taxpayers should wait two to three weeks before checking refund status, and processing can take up to nine weeks.

What taxpayers should do

Read every IRS notice carefully. Use the notice number and tax year to identify the required response and deadline.
Verify identity only through official IRS tools. Do not send Social Security numbers, tax returns or bank information through unofficial websites, messages or callers claiming to represent the IRS.
Check an IRS Online Account and Where’s My Refund? These tools provide different information. An online account can show notices and account details, while the refund tracker provides status updates.
Consider an Identity Protection PIN. An IP PIN can help prevent someone else from filing a federal return using a taxpayer’s Social Security number or ITIN.
Seek additional help when ordinary channels fail. Taxpayer Assistance Centers offer in-person service by appointment. The Taxpayer Advocate Service may help when a taxpayer faces financial hardship or cannot resolve a serious problem through normal IRS channels.

What happens next

The report sets out the Taxpayer Advocate Service’s priorities for fiscal year 2027, including reducing identity-theft delays, improving communication when returns are suspended and making paper-refund procedures clearer.

Those priorities are recommendations and advocacy objectives, not completed IRS reforms. The report’s central distinction is that digital-first tools can serve many taxpayers well, but they cannot replace meaningful telephone, in-person, correspondence and case-resolution options for people with unusual circumstances or limited digital access.

For taxpayers, the practical lesson is simple: a strong filing-season topline does not mean every refund is moving normally. If the IRS freezes a return or requests identity verification, the notice and official IRS tools are the starting point; if those channels fail and the delay creates serious hardship, in-person assistance or the Taxpayer Advocate Service may be the next step.

Sources

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