Danny Werfel, former commissioner of the Internal Revenue Service, sees "a lot of reasons for concern" as the 2026 tax filing season nears, given the government shutdown and layoffs at the IRS.
Taxpayers "need to understand the differences between a functioning IRS — an IRS that's running on all cylinders — versus a 'messy' IRS," Werfel said at a recent Tax Trends Seminar held in Washington by the American Bar Association and Tax Notes.
For advisors, now is the time “to review workflows, set earlier internal deadlines, and inform clients about the possibility of slower refunds or IRS responses," according to Jeff Bush of The Washington Update.
Because the tax code changes each year, fall is a busy time for the IRS as it prepares for filing season, which typically starts in January.
"We have a higher-than-average number of changes this year" due to the One Big Beautiful Bill Act, Werfel said. "If you were mapping changes in the tax law, it would spike this year — and will spike even higher next year because a fair number of OBBBA provisions will go into effect then."
President Donald Trump signed a bill to end the shutdown Wednesday night. It could take weeks to reboot normal operations.
Declining Resources
The IRS lost 31% of its auditors to buyouts and layoffs in 2025 tied to Elon Musk’s Department of Government Efficiency, according to an IRS watchdog report.
Since Werfel left in January, the agency has had six commissioners, including Treasury Secretary Scott Bessent, who is currently serving as acting commissioner.
The start of the 2026 tax season may be delayed to February due to the scale of the required changes. Former acting IRS Commissioner Billy Long said earlier this year that he anticipated a delay due to changes that needed to be implemented related to OBBBA.
Rep. Richard Neal, D-Mass., strongly discouraged such a delay, saying it would affect tens of millions of tax refunds.
Werfel, now an executive in residence at the Johns Hopkins University's new School of Government and Public Policy, said that the IRS has requested $850 million "to bulk up staffing in the call centers."
As to the turnover at the agency, Werfel said he’s “bearish versus bullish based on the shutdown and resource drain and the uncertainty whether the IRS is going to get the $850 million it says it needs in time to staff up."
Advisors Need to Be 'More Proactive'
A "weakened IRS" does not mean that taxpayers will pay less in taxes, Werfel said. "That's just not the case. What a 'messy' IRS means is more stress for you as a taxpayer."
A "messier IRS is more prone to mistakes — those mistakes are going to land on taxpayers ... and then you're going to have an issue to resolve — and you can't get through — the walk-in centers aren't open, phone lines are jammed up," he continued. "When you do get through, do you have someone trained on the other end of the line? And tools they need to resolve the issue?"
Also, "chaos in any regulatory or legal environment does not create the conditions for a thriving marketplace, a thriving economy," Werfel added.
Bush of The Washington Update agreed in an email Tuesday that the 2026 filing season "probably won't be routine."
For advisors, "this means their role will become more proactive — from setting clear client expectations and tightening documentation to speeding up tax planning and preparing for filing delays," Bush said.
IRS employees will “be handling more questions and inquiries with less time and fewer co-workers," Bush added. The IRS' "performance metrics are likely to drop sharply with all these events occurring at once, and clients, along with their advisors, will bear the worst of it."
A CEO at the IRS
In early October, Bessent announced that Social Security Commissioner Frank Bisignano would take on a second job as CEO of the IRS — a newly created role with no Senate confirmation needed — which outraged Social Security advocates.
Werfel said he sees the move as a "recognition that there's been too much volatility" at the agency. Also, when the Treasury secretary is the acting IRS commissioner, "that might not be a sustainable leadership operation."
Werfel said he wished Bisignano wasn’t doing two jobs at once. "But everything I've heard about Frank is that he's really, really competent, really credentialed in running corporations."
Sens. Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore., took a different view on Bisignano’s competence as an executive, announcing on Nov. 7 that they were investigating his tenure as CEO of Fiserv prior to his appointment to lead Social Security.
"After his confirmation, he divested more than $550 million in Fiserv stocks — just months before the company’s stock price declined by more than 50%," the senators told Fiserv CEO Mike Lyons in a letter.
“At a minimum, Mr. Bisignano appears to have failed to manage Fiserv effectively, and may have misled investors and the public about the company’s financial status, raising concerns about his ability to serve as a key Social Security and IRS official in the Trump Administration,” the lawmakers wrote. “Because of Mr. Bisignano’s mismanagement, many Fiserv investors, including retirees and members of the public, lost money — a fate Mr. Bisignano avoided.”
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