This Filing Season is Open Season on Taxpayers

Over the course of tax filing season – from late January to mid-April – the Internal Revenue Service (IRS) will accept and process more than 250 million tax returns and more than $5 trillion in revenue to fund the federal government, enabling functions like national defense, health care, and social security. Tax season combines an unholy trinity of unintelligible legal obligations, confusing paperwork, and expensive private sector tax preparation services for American families. According to the IRS, the average taxpayer spends $290 and 12 hours preparing their taxes each year.  

We spent the last five tax seasons at the Treasury Department and the IRS monitoring progress – and the customer service metrics. We are seriously concerned this tax season will be more difficult than usual for taxpayers, because the Trump-Vance administration has gutted the IRS  -  even as it tries to implement the complicated new tax law, the misnamed One, Big, Beautiful Bill Act (OBBBA) and hollowed out the consumer protection agencies that police private sector filing services. ​As a result, we think taxpayers are particularly vulnerable to tax scams this tax season.
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Tax Law Changes Will Make This Season Difficult for Taxpayers and the IRS

New provisions in the OBBBA apply to individual taxpayers, and involve collecting complicated documentation. For example, the White House has trumpeted a “no tax on overtime” pay provision, but the standard tax form sent to employees from employers (the W2) does not break out overtime pay from standard wages. That means taxpayers will have to collect individual paystubs to attempt to determine what income qualifies for the deduction. This kind of logistical complexity increases the time burden and risk of error for taxpayers, and the administrative burden placed on the IRS.

These problems are exacerbated by how the new provisions have been marketed by the president and Congress – for example, as “no tax on tips,” “no tax on overtime,” and “no tax on Social Security.” This language is even reflected in the headings of the IRS worksheet used to calculate the deductions.

However, tens of millions of Americans who received tips, overtime, or Social Security payments still owe federal taxes on that income because all of the provisions in the new law have significant caveats and qualifications. For example, the tip and overtime deductions are capped at a certain income threshold, and Social Security will still be taxed (with new deductions). When Americans take the marketing (and the form headlines) literally, they will be left holding the bag when penalties and interest start to accrue.

This muddled messaging will provide a fertile ground for scammers. Tax preparers do not have to meet any education or ethics requirements to offer filing services. While many provide excellent and ethical service, unscrupulous tax preparers take advantage of taxpayers every year. They will promise unrealistic refund amounts to attract clients, and allow taxpayers to claim higher deductions than they are owed. These preparers often prey on taxpayers who are most in need of their refund: one study showed that 96 percent of mistakes made in claiming the Earned Income Tax Credit (EITC) were found in returns prepared by uncredentialed preparers. 

This filing season, we can expect predatory preparers to offer to submit incorrectly calculated returns, collecting their fees, and leaving taxpayers with balances and penalties owed to the IRS. 
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Layoffs at the IRS and Killing Critical Free Tax Preparation Tools Will Make Mistakes More Costly for Taxpayers

The IRS plays an important role in fighting these scams by providing reliable answers to taxpayers. However, the Trump-Vance administration has created a staffing crisis at the IRS. Radical and rapid downsizing has reduced the size of the agency by 25%,  unprecedented leadership turmoil has left the IRS without a full-time commissioner, and 77% of the senior leaders left or were pushed out of the IRS in 2025. Some of the damage from these actions could have been alleviated through the successful recruitment of seasonal workers during tax season, but this year , the IRS missed critical hiring targets for the team that processes tax returns by 98%. Without the thousands of staffers trained to pick up the phone, open paper mail, and answer taxpayer questions, taxpayers who call and ask for help will spend hours on hold. The situation is projected to be so bad that the IRS has quietly already reduced its goal for how quickly it hopes to serve taxpayers. 

Taxpayers who make a mistake or have a dispute with the IRS – for example, by misinterpreting the new “no tax on” provisions” –  will also have significant delays in refund or payment processing. In previous years, when staffing was low because of budget problems, paper processing delays led to tens of millions of files being stored in hallways and IRS cafeterias. These delays can have a huge impact on the lives of taxpayers – for low income taxpayers, their refund is the single largest payment they receive all year.

This is a shame, because over the last few years, the IRS has made real progress in creating free and easy-to-use digital tools to help taxpayers accurately file – but those options aren’t available this year. The IRS Direct File program debuted in 2024 as a pilot with simple returns, but continually improved, even pre-populating some taxpayers’ tax returns with information the IRS already had. This electronic method of providing tax help could have mitigated some of the staffing needs. 

Taxpayers loved Direct File – in 2025, 94% of taxpayers reported their experience as “excellent” or “above average.” But the Trump-Vance administration killed the Direct File program this year and fired the team, following intense lobbying from the tax preparation industry. Had it existed this year, the IRS development team could have built capacity to help taxpayers correctly claim the new provisions. Now, most taxpayers who want help filing their taxes online have to pay to use private sector tools or hire a tax preparer.

Democracy Forward has been actively opposing the Trump-Vance administration's efforts to dismantle the civil service, including challenging in court the probationary firings referenced above. 

The Federal Government’s Watchdogs Policing Private Sector Tax Preparation Services Are Diminished

Many taxpayers successfully use private tax sector tax preparation software for help filing their taxes. However, over the last decade, the Federal Trade Commission (FTC) and other consumer protection enforcers have had to take action repeatedly to prevent those same companies from violating  consumer protections. This year, due to staff reductions and realignments, they will not have the same capacity to protect taxpayers who are scammed.
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For example, both of the two largest tax preparation companies have been the subject of numerous enforcement actions by the FTC for representing their software as free or low-cost – and then trapping taxpayers into paying hidden or unexpected fees. All fifty states and Washington, D.C. settled with Intuit in 2023 for predatory and deceptive practices related to participation in the IRS Free File program. Just last year, both H&R Block and Intuit settled cases with the FTC about their “free” private sector products that weren’t actually free for most taxpayers.

Despite this troubled record, these large firms have expanded into more financial products; this year both H&R Block and Intuit are offering refund advance loans – a variation on a payday loan for a tax refund.

These financial products are similar to those regulated by the Consumer Financial Protection Bureau (CFPB). However, given the Trump-Vance administration’s general lax enforcement approach, the more than 20% attrition at the FTC, and the administration’s plans to cut CFPB’s staff from 1800 to 200, it seems unlikely the FTC and the CFPB will subject the tax preparation companies or their products to scrutiny, leaving taxpayers to fend for themselves.

Reimagining Tax Enforcement & Consumer Protection

The government relies on citizens paying their taxes to operate. We hope one day Americans won’t have to shell out $148 billion a year to meet that legal obligation.
As part of Civil Service Strong’s Democracy Works 250 initiative, we will spend the next year documenting how attacks on the workforce at the IRS and in consumer protection agencies generate real-world consequences for working families. And we will use this reflection as an opportunity to identify practical reforms that strengthen the agencies that taxpayers and consumers rely on. Join us! 

The authors are both Civil Service Strong Fellows. ​Julie Brinn Siegel is the former Deputy Chief of Staff for the U.S. Treasury Department and the former Deputy Federal Chief Operating Officer at the Office of Management and Budget. John Pierce is a former Senior Advisor at the Internal Revenue Service. Both have worked extensively on efforts to improve and modernize the IRS.