IRS Plan for Extra Funding Includes Focus on Employees

The IRS plan for using additional funding it was authorized under last year’s Inflation Reduction Act includes stepped-up hiring and numerous employee-oriented initiatives that it presents as making up for the impact of a decade of tight budgets.

The agency budget fell 22 percent over 2010-2021 in real terms, “leaving us with outdated technology and a shrinking workforce in the face of an increasingly complex tax environment in which to administer the U.S. tax code,” says the plan for using the $80 billion over baseline spending for the next 10 years that last year’s law authorized.

IRS staffing dropped in that time from 95,000 to 80,000, and employees “are not equipped with the resources they need,” it adds. “They often lack access to the right data at the right time to answer taxpayers’ questions or to resolve taxpayer issues. Often, employees must access a variety of legacy systems to address an issue and may need to ask for help from various other IRS employees. Moreover, many employees lack the basic tools and supplies they need.”

Initial efforts are to include improving online, phone and in-person customer service; timeliness of processing tax returns; and in-house IT. Future steps include helping taxpayers identify potential mistakes before filing and fixing errors that delay refunds.

Critics of that law have asserted that the IRS would double in size over that period, based on an earlier Treasury Department projection that the agency would hire that many employees over the 10 years. That projection—along with claims that much of the growth would be for enforcement against middle and lower income taxpayers—was a main motivation for a bill the House passed early this year to repeal that additional funding; the bill has not progressed in the Senate and is not expected to. The IRS had replied that hiring would mostly be needed to make up for normal attrition and to revitalize customer service and enforcement.

In releasing the plan, the IRS repeated prior statements that the agency intends to hire some 10,000 employees in the current fiscal year, with about half of those already onboard, mostly in customer service functions. Hiring of another 20,000 is planned for fiscal 2024, concentrated in enforcement and customer service.

“We will focus IRS enforcement resources on hiring the accountants, attorneys, and data scientists needed to pursue high-income and high-wealth individuals, complex partnerships, and large corporations that are not paying the taxes they owe,” while not increasing audit rates on small businesses or on households making under $400,000 per year, the plan says.

However, it adds that the agency is facing headwinds including a high rate of retirement eligibility among its current employees, competition from the private sector for people with the skills it needs, and the need to simplify and speed up the hiring process.

For employees, it says, “We will improve the employee experience and empower the workforce to drive better taxpayer experiences, with clearer career pathways that will improve retention and support career growth and opportunity.” It also promises that employees will “have the appropriate information, analytical skills, communications tools, and authorities” needed in settings such as customer service and enforcement.

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