IRS staffing crunch spills into filing season support roles. The IRS is assigning Human Resources staff and other employees with little or no tax background, as well as high-paid tax specialists with no experience in taxpayer services, into front-line filing season work, like answering phones and helping process returns. The IRS has lost more than 27,000 employees in the past year (more than 25 percent of its workforce). Units tied most directly to filing season have lost about 8,300 workers (17 percent), with return backlogs at roughly 2 million (up 33 percent from a year ago). The Treasury Inspector General for Tax Administration warns hiring has not kept pace: The return-processing division reportedly hired about 50 employees for the 2026 filing season (about 2 percent of its authorized level), and Accounts Management—the people who answer taxpayers’ calls and open correspondence—has filled about 66 percent of authorized filing-season positions.
Lawmakers ask Treasury to explain IRS retirement-check delays. Reps. Lloyd Doggett (D-TX), Terri A. Sewell (D-AL), and Donald S. Beyer Jr. (D-VA) wrote acting IRS Commissioner (and Treasury Secretary) Bessent, pressing for answers about a backlog of retirement applications at the IRS that is delaying annuity payments and annual-leave payouts for former employees. Tax Notes (paywall) reports that some IRS workers who retired on September 30, 2025, after taking a deferred resignation offer, are still waiting, and that the backlog was about 7,300 applications as of December 2025. The representatives are asking for current backlog numbers and an estimated timeline to clear the queue. Probably contributing to the backlog is the nearly 30 percent reduction in the agency’s Human Capital Office’s staff over the past year.
New “no tax” breaks come with very fine print. Politico examines last year’s reconciliation law’s headline deductions and reports that “no tax on tips,” “no tax on overtime,” and the new auto-loan interest break are more complicated in practice than the slogans suggest. Refunds may rise, but plenty of filers could find themselves wrestling with eligibility rules and documentation. The overtime deduction hinges on labor law, limits what overtime pay applies, and may require workers to reconstruct eligible amounts from pay records because employer reporting was temporarily waived for retroactive calculations. Moreover, claiming previously unreported tips could trigger Social Security and Medicare taxes that reduce or erase the benefit, and the auto-loan break applies only to new vehicles bought after December 31, 2024, with “final assembly” in the US.
Idaho advances federal conformity bill as budget pressure builds. The Idaho Capital Sun reports that the Idaho House approved a bill to conform state taxes to most provisions of last year’s reconciliation act, including the deductions for tips, overtime, and new auto-loan interest. Lawmakers say the cost is projected to be at about $155 million in the current fiscal year and $175 million next year, and that the legislation is ill-timed: Idaho agencies have already been told to cut spending, and Gov. Brad Little (R-ID) previously ordered 3 percent reductions outside public schools amid a projected shortfall. The bill now heads to the Senate, with the central question being how much tax relief Idaho can absorb without squeezing already-tight agency budgets.
Hungary’s “solidarity tax” fight spills into rule-of-law concerns. Hungary’s Prime Minister Viktor Orban ordered the termination of a lawsuit Budapest filed over a disputed “solidarity tax,” prompting the city’s mayor to say the move undermines judicial independence ahead of Hungary’s April 12 election. The court itself noted that procedural steps in pending cases are normally up to the judge, while legal advocates argued the decree conflicts with the separation of powers because the executive branch is also a party to the dispute.
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