The Internal Revenue Service (IRS) is gearing up for the 2025 tax filing season, which officially begins on January 10, with the launch of its Free File Guided Tax Software. This program allows millions of American taxpayers to file their returns at no cost, addressing the needs of the approximately 100 million eligible users, according to the Free File Alliance.

Despite the introduction of this resource, the National Taxpayer Advocate report reveals ongoing issues, including significant delays for those awaiting refunds and unresolved identity theft claims. The report, crafted by Erin M. Collins, emphasizes that while the IRS has made strides due to funding from the Inflation Reduction Act, many taxpayers still face frustrations marked by refund lags and identity theft complications (AP News).

The IRS has historically dealt with the burdens of processing paper returns, which Collins describes as the agency's "kryptonite." As the IRS continues to receive an annual influx of over 10 million paper returns, the processing delays persist, impacting numerous taxpayers who turn to e-filing or face complications during the review of their returns (CBS News).

Adding to those concerns is the ongoing backlog related to the Employee Retention Credit (ERC), a program intended to assist employers who faced challenges during the pandemic. With approximately 1.2 million claims pending, many businesses are depending on these funds to continue operations (CBS News).

IRS Commissioner Daniel Werfel acknowledged the improvements made possible by the recent funding but noted that "identity theft remains one of our largest service gaps." The IRS is currently refining its approach to these cases, focusing on faster resolutions for simpler issues to alleviate some of the pressures faced by taxpayers (AP News).

Overall, Collins points out that while the IRS has made headway in various areas, including enhanced customer service, challenges remain evident, threatening taxpayer satisfaction and compliance. The report emphasizes that Congress must prioritize taxpayer service as they navigate funding and enforcement priorities moving forward.