National Taxpayer Advocate Erin M. Collins released her Fiscal Year 2027 Objectives Report to Congress on June 24, 2026. The headline finding is that the 2026 filing season, which many predicted would be a disaster given workforce reductions, leadership turnover, and the rollout of the One, Big, Beautiful Bill, actually ran better than expected for most taxpayers. The IRS processed close to 139 million individual returns, issued more than 90 million refunds, and delivered 98 percent of those refunds by direct deposit. The average refund was $3,275.
For the taxpayers whose returns cleared the automated systems cleanly, this was a functional filing season. For the taxpayers whose situations required human help, it was a different story. That divide is the heart of the report.
The good numbers
About 98 percent of returns were filed electronically. Taxpayers logged into their Individual Online Accounts nearly 121 million times during the filing season, and pulled information returns from those accounts more than 3.7 million times. Where’s My Refund? was checked about 346 million times, up 9 percent year over year. Practitioner Priority Service answered 72 percent of the calls it received, with an average hold time of 8 minutes, which is the best performance on that list of the top ten telephone lines.
The bad numbers
Phone performance on the highest need lines fell off a cliff. The Installment Agreement/Balance Due line received 3.4 million calls, answered 31 percent, and made taxpayers wait an average of 45 minutes to reach a live employee. The Taxpayer Protection Program line (the line taxpayers call when their return has been suspended for suspected identity theft and they need to authenticate) received 2.4 million calls, answered 19 percent, and averaged a 20 minute hold. Overall the IRS received 48.1 million calls during the filing season and answered 9.9 million with a live assistor, which is 21 percent, down from 25 percent the prior year.
More than 14 million individual returns were suspended by IRS processing filters. Over one million taxpayers waited longer than the IRS’s normal processing time to get their refunds, with an average delay of about 5 and a half weeks.
Identity theft victim assistance cases remain the report’s ongoing indictment. TAS reports that resolution times still average about 20 months, and more than half a million cases were sitting in inventory at the end of the filing season. Collins has flagged these delays as unconscionable for three straight years.
The paper check problem
Executive Order 14247, which directs federal agencies to move toward electronic payments, hit real problems in practice. The IRS did not establish clear procedures for the taxpayers who cannot use direct deposit (unbanked and underbanked taxpayers, some elderly taxpayers, taxpayers residing overseas, and others for whom electronic payment was not feasible). About 4 million notices went out for returns without valid direct deposit information. The notices instructed taxpayers to log into their online accounts to fix the information or request a waiver, except most affected taxpayers do not have online accounts and some cannot establish them. The notice also failed to mention that a waiver could be requested by calling the 1040 line. Refund delays of 6 weeks or more resulted.
Why this matters for tax pros
Four operational takeaways for the practice.
First, use Practitioner Priority Service. The data confirms what the calendar felt like this year: PPS is running significantly better than the general phone lines. If a client issue can be resolved through PPS with a Form 2848 or Form 8821 on file, that is the fastest route in. Non PPS lines should be treated as a last resort during peak season.
Second, build identity theft cases with the two year timeline in mind. Until TAS makes real progress on the backlog (and that is an FY 2027 objective, not a fixed fact), any client whose return has been flagged for suspected identity theft should be counseled early about the realistic timeline. That means engagement letter language around scope, fee structure that accounts for extended representation, and financial planning conversations with the client about what a 20 month wait means for cash flow. For any client relying on the refund to cover rent, medical, or basic living expenses, the referral to TAS should go out early, not late.
Third, screen every client for the paper check trap. If a client cannot receive refunds by direct deposit, do not assume the IRS’s notice process will get them a check without intervention. Confirm direct deposit information at the return level, and if paper is the only option, document the reason in the file and be ready to walk the client through the waiver request. Practitioners with elderly, unbanked, or overseas clients should build this into the return prep checklist for next season.
Fourth, watch the Kwong v. United States litigation. The first item on the TAS FY 2027 advocacy objectives list is protecting refund rights if Kwong is affirmed on appeal. The Court of Federal Claims held that filing and payment deadlines were suspended during the three and a half year COVID 19 disaster period, which would mean the IRS should not have assessed penalties for late filings and payments in that window. If the appeal affirms, practitioners will need to identify affected clients and preserve refund claims. This is worth calendaring now for any client hit with late filing or late payment penalties in the COVID era window.
The FY 2027 objectives list, in brief
TAS identified 11 advocacy objectives for the coming fiscal year. Beyond the Kwong watch and the identity theft and paper check items already flagged above, the list includes: making digital asset reporting easier for taxpayers to comply with, improving math error notices and abatement procedures (a requirement of the 2025 Internal Revenue Service Math and Taxpayer Help Act), improving the process for extending the refund statute of limitations during pending audit reconsiderations or appeals, improving online Tax Pro accounts, reducing refund delays when returns are suspended, ensuring penalties are fairly and consistently applied (given that millions of assessed penalties are later abated), improving how the IRS records Powers of Attorney so practitioners can start work without delay, and reducing delays in processing returns filed by or on behalf of deceased taxpayers.
Of the 64 administrative recommendations Collins made in her 2025 year end report, the IRS has agreed to implement 47 in full or in part. That is a 73 percent adoption rate, and it is a decent indicator that the FY 2027 recommendations have a real chance at moving the needle.
Collins closed the report with a warning worth carrying into next filing season: a digital first strategy can improve tax administration, but it must not become a digital only strategy. The taxpayers who fall outside standard processing channels are often the ones who need help the most.
THE TTR TAKE
This report is a report card and a roadmap. If you have clients stuck in identity theft limbo, waiting on paper checks, or trying to reach a human at IRS collections, the data confirms what you already know. Use Practitioner Priority Service, calendar the Kwong appeal, and start next filing season with a screening question about direct deposit for every client.
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Direct link to the official Internal Revenue Service announcement.