Following is the section of a recent IG report on the IRS focusing on the impact of staff reductions and high rates of retirement eligibility of the agency’s employees.
Human capital is the Federal Government’s most critical asset, making strategic management of human capital a top priority of the IRS. Continued focus by IRS management on human capital will remain important because the IRS is facing several key challenges.
First, a wave of anticipated retirements presents a critical challenge in the human capital area. More than a third of all executives and almost 20 percent of nonexecutive managers are currently eligible for retirement, according to IRS data. By the end of FY 2017, nearly 70 percent of all IRS executives and nearly half of the IRS’s nonexecutive managers are projected to be eligible for retirement. Overall, about 40 percent of the IRS’s employees will be eligible to retire within five years.
In FY 2013, the IRS experienced significant changes in its most senior executive leadership. Further, the IRS’s challenge of having the right people in the right place at the right time is made more difficult by many complex internal and external factors. Budget constraints have resulted in fewer personnel to accomplish the IRS’s mission. Specifically, the IRS’s workforce shrank by about 10,000 employees between the end of FY 2010 and the end of FY 2012. This reduction in employees possessing unique skills and institutional knowledge is particularly challenging as the number of tax returns the IRS processes continues to rise and the number of identity theft fraud cases the IRS works is also increasing.
The IRS will also be required to implement provisions related to the ACA using its own operating budget in the future, further stretching its limited resources. TIGTA reported that outstanding corrective actions in response to human capital audits require a continued focus by IRS management.
For example, TIGTA has found that the IRS needs to develop an agencywide strategy for integrating new employees into the workforce because some best practices that would help new employees become more productive were not fully implemented. With a shrinking workforce and budget, the IRS will be challenged to successfully achieve its mission of providing America’s taxpayers with top-quality service by helping them understand and meet their tax responsibilities and enforcing the law with integrity and fairness.
