The IRS is Running Tax Season Without a Leader. Your Refund Doesn’t Care, But You Should
Tax Day arrives tomorrow, whether the IRS is ready or not.
And right now, by most reasonable measures, it isn’t. In 2025, seven different people held the top job at the Internal Revenue Service — the most leadership turnover in the agency’s 164-year history. Five of them were never confirmed by the Senate. Treasury Secretary Scott Bessent stepped in last August under the Federal Vacancies Reform Act, but that authority expired in March, exactly one month before the filing deadline. There is, at this moment, no acting commissioner.
In place of one, the administration created a new title — IRS CEO — and gave it to Frank Bisignano, who in his other full-time job runs the Social Security Administration. Two of the largest, most operationally complex agencies in the federal government, one human being. Filing season started during a six-week government shutdown that sent nearly half of remaining IRS staff home. Total headcount is down roughly 25% from a year ago.
Honestly? Hats off. As of the first week of April, the agency had still processed nearly 100 million returns. The plumbing works even when the org chart doesn’t.
The refund story is real. The framing is misleading.
As of April 3, the average federal refund is $3,462 — up about $360, or 11.1%, from the same point last year. That’s a meaningful bump, and the One Big Beautiful Bill Act is doing the work: a higher standard deduction, expanded Child Tax Credit, new deductions for tip income, overtime pay, auto loan interest, a $6,000 deduction for filers over 65, and a SALT cap that jumped from $10,000 to $40,000 for itemizers.
It is also not the $1,000 increase the administration projected in January. And it is unlikely to get there. Filers who expect refunds tend to file early. Filers with more complex returns — and outstanding balances owed — file late. The April 15 final number will probably drift down from here, not up.
More importantly: a $3,462 refund is not a win. It is the federal government returning to you, without interest, money you loaned it across the previous twelve months. Distributed evenly, that’s about $300 a month of cash flow you didn’t have — $300 a month you may have been putting on a credit card at 22% interest. The single highest-ROI thing you can do tonight is open the IRS withholding estimator, run your numbers, and update your W-4. It takes ten minutes. Your HR portal will process it in one pay cycle.
The bigger story: the tax code can’t catch the economy it’s supposed to tax.
This is the part that should keep you up at night, and it has nothing to do with which administration is in power.
Bitcoin launched in 2009. The IRS issued its first formal guidance in 2014 — a five-year lag. Crypto exchanges weren’t legally required to report transaction data to the IRS until 2023, fourteen years after Bitcoin went live. This year, 2026, is the first time individual filers are receiving a Form 1099-DA for digital asset transactions. Full cost-basis reporting doesn’t arrive until next year. That is a seventeen-year lag between the launch of a new asset class and complete tax reporting infrastructure.
Now compare that pace to what just happened in prediction markets. In March 2025, total trading volume across every prediction market combined was about $2 billion. In March 2026, Kalshi alone did $12.35 billion. Polymarket did another $10 billion. That’s roughly a twelve-fold increase in twelve months.
If you traded on Kalshi or Polymarket last year and made money, how is that income classified? Short-term capital gain? Ordinary income? Gambling winnings under IRC §165? What if it was settled in USDC instead of dollars? What if it was a long-dated political contract that resolved more than a year out? Ask three different tax attorneys and you will get three different answers — and a recommendation that you file an extension.
The same gap exists across the rest of the modern economy: gig income, SPACs, SPVs, secondaries, fractional real estate, tokenized treasuries. The democratization of investing is, on net, a good thing. More people having more access to wealth-building tools is something to defend. But here is the insider read on what happens when complexity outpaces enforcement:
Compliance becomes a barrier to participation. Filers who can afford a sophisticated CPA can navigate ambiguity. Filers who can’t are either locked out of new opportunities or quietly exposed to penalties they didn’t know existed. A tax code that requires professional expertise to comply with is, functionally, a regressive barrier — one that hits hardest exactly where the democratization of wealth was supposed to help most.
This isn’t a left-right issue. The left should care because regressive enforcement undermines progressive policy. The right should care because an inefficient code requires higher rates to produce the same revenue. Both sides should want an IRS modern enough to keep up — and right now, neither side is getting one.
Four things to do before midnight tomorrow
1. Check your W-4. Especially if you’ve had a major life change — marriage, divorce, a kid, a job change. Your withholding should reflect your current life, not the one you had three years ago.
2. If you’re filing an extension, know what an extension actually is. It extends your filing deadline. It does not extend your payment deadline. You are still required to make a good-faith estimate of what you owe and pay it by April 15, or you’re subject to late-payment penalties and interest.
3. Reassess whether your tax preparation is still serving you. If you went from 1099 income to a clean W-2 last year, you do not need the $2,500 CPA. TurboTax or IRS Direct File will handle it. Conversely: if your situation got materially more complex, the right preparer is an order of magnitude cheaper than the wrong filing.
4. Check whether you live in a federally-designated disaster zone. Los Angeles County filers have until October 15. Five states in the Southeast — Alabama, Florida, Georgia, North Carolina, South Carolina — and parts of four others have until May 1. All of Kentucky and parts of West Virginia have until November 3. The IRS publishes the full list. Don’t pay for a rush filing you don’t need.
The tradeoff
We have a tax code designed for a 20th-century economy, enforced by an agency running at three-quarters staff without a permanent leader, asked to keep up with markets that invent new asset classes every quarter.
In some ways, that’s a good problem. I don’t want innovation moving at the speed of government — I want government to chase its tail because the private market has out-innovated it. But in the near term, the consequences of the gap fall to you.
Adjust your withholding. Know your deadlines. Know how your income is classified. That’s the work.
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