IRS plans massive hiring spree to help reduce backlog of tens of millions of returns

The agency plans to use money from its existing budget, much of which comes from coronavirus stimulus funding, to pay for new hires, to be made over the next two years. The number of new jobs would represent a 14% increase in the IRS workforce. It’s still unclear how much the agency will spend on the hiring plan, officials said, but it will be significantly lower than President Biden’s proposed IRS investment of $80 billion over the next decade.

The IRS entered tax season this year with 24 million unprocessed paper returns and correspondence, nearly all dating back to the 2020 filing season. Taxpayer advocates and members of Congress called on the agency to s tackle the backlog, citing potentially dire financial consequences for Americans who rely on their tax credits and reimbursements for basic living expenses.

A government official said the IRS does not expect to resolve the backlog until the end of 2022. But he hopes the wave of hiring, the largest at the IRS in decades, will galvanize a response strong in the mountain of unprocessed documents at the agency. He also hopes to restore public confidence in the tax collector after the coronavirus pandemic sidelined many of his staff, hampered customer service and led to a wave of unexpected retirements.

IRS staffing demands have been compounded by recruiting difficulties and low salaries across its operations. Vacancies range from crucial entry-level jobs with a smooth filing season to more specialized roles for technology experts who can upgrade computer systems and tax attorneys to conduct complex audits of wealthy taxpayers and businesses. .

The IRS won approval from federal personnel officials this week to speed up the hiring process by bypassing time-consuming recruiting and vetting procedures common to federal hiring, the people said. Civil servants will also be able to offer competitive salaries to attract experts from the private sector.

Hiring managers across government have chafed for years at the dead ends they face when scouting for new talent as well as salary caps in many roles that pay more in private companies. By obtaining what is called direct hiring authority, the IRS will be able to expedite hiring with a less complicated process, eliminating some screening requirements.

The agency will also be able to circumvent a salary cap that for years limited the pay of many workers, although it’s unclear how many jobs that would cover. But experts warn that the reinforcements could arrive too late to spare taxpayers mounting delays during the 2022 filing season.

Commissioner Charles Rettig announced in February that he was temporarily reassigning 1,200 staff as part of a “reinforcement team” to help. But those workers only started their new details this week, said a person familiar with the hiring plans. A second “reinforcement team,” the person said, is being formed with personnel to be drawn from agency departments.

Meanwhile, thousands of employees are working overtime to sift through the backlog of paper and amended returns and correspondence left over from last year’s production season, and bringing in outside contractors to help to treatment.

The internal staff shuffle came after the IRS announced 5,000 new positions in the division that answers phones and handles correspondence, hoping to lay the groundwork for a smooth tax season this year. But less than 200 new employees were hired due to the tough job market.

Many positions included in the new hiring authority require months of training. For example, tax auditors in the Payroll and Investments Division, the agency’s largest taxpayer services section, need eight to 18 weeks of training before they can start work. Contact service representatives, the workers who answer the phone, respond to mail and record data from paper returns, need more than 37 weeks of training.

New efforts to recruit IT professionals could take even longer to bear fruit. The IRS is revamping the backbone of the tax administration infrastructure, a program called the “Individual Master File,” which was created in the 1960s using a coding language that has largely disappeared.

The most ambitious estimate for the project’s competition is 2030, according to the Government Accountability Office, but developments have been slowed each time Congress passes new tax laws, which require the IRS’ already limited staff to reschedule tax bills. parts of the software.

The IRS’ administration of stimulus payments and the child care tax credit has forced the agency to divert staff from modernization efforts to fill programming gaps. Experts say this has given the IRS a bad name among IT professionals who believe the agency is not committed to modernization and that top talent can be reassigned at the whim of Congress.

“The IRS has entered reporting season so far behind on processing that it will take until December to sort through all this paperwork,” said Nina Olson, executive director of the Center for Taxpayer Rights and former National Taxpayer Rights Advocate. taxpayers. “If they get permission to hire people, even if they only bring in 100 people at a time here and there, but regularly over the next few months, that will help. But what it will do is get the IRS into the 2023 filing season, not a hole. I don’t want people to hope for 2022.”

The IRS requested direct hire authorization from the Office of Personnel Management, the federal government’s human resources department, in the spring of 2021, but the OPM denied the request, saying it was too broad, according to a manager aware of this effort.

Staffing has long been one of the IRS’ most pressing hurdles. The agency has lost nearly 20,000 staff since 2010. The division responsible for opening paper returns and manually transcribing them into a computer file lost around 20% of its staff to retirements last year. and departures, said two agency officials familiar with the situation.

Chronic underfunding from Republican-enforced budget cuts over a decade — its annual inflation-adjusted statutory appropriation fell about $2.5 billion during that time — means the IRS often cannot not replace employees who retire or leave for other jobs.

Another wave may soon hit the agency. Executives expect another 5,590 workers to retire this year. Nearly a quarter of the 74,000 employees are eligible for retirement.

“For so many years they were underfunded and had a stable workforce, so they weren’t focused on recruiting,” said Rebecca Thompson, vice president of the civil rights group. Prosperity Now and member of the Internal Revenue Service Advisory Council. “Now the rubber is about to hit the road.”

Complicating the ambitious expansion is intense competition for workers trained in the intricacies of the US tax code and internal IRS processes. The agency has long paid well below the private sector for comparable positions. Employees who answer taxpayer questions on the phone and handle correspondence earn between $24,000 and $41,000 a year, depending on their seniority.

“This only creates a situation where the IRS will continue to be completely overwhelmed by the professional wealth defense industry which obviously compensates its professional wealth concealers at much higher levels,” Chuck Collins said. , Senior Fellow at the Institute for Policy Studies. think tank and author of “The Wealth Hoarders”.

Besides allowing its workforce to dwindle, critics of the IRS say it has not invested in new technology for those left behind in recent years because it has focused on boosting electronic processing. statements.

The agency’s aging mail scanners, for example, forced the IRS to forfeit $56 million in 2021 because they couldn’t determine whether envelopes contained checks, the IRS inspector general reported. ‘agency. In 2020, the IRS paid $435 million in interest on refunds because it did not send them to taxpayers in a timely manner, according to the National Taxpayer Advocate Service.

At the Kansas City, Missouri tax processing center, employees work six days a week with mandatory overtime, said Shannon Ellis, president of the local National Treasury Employees Union, which represents employees at the IRS.

For years, the IRS struggled to attract local job seekers as nearby employers raised their own wages. A local Amazon installation offers $19 per hour, she said. A target nearby just started advertising an hourly wage of $24. Entry-level IRS employees in Kansas City earn $15 an hour. The staffing shortage in Kansas City could get worse, she said. Nearly half of the 5,000 workers on campus will be eligible for retirement within the next two years.

Plans to hire more employees could improve morale and productivity, Ellis said, but she and her colleagues remain skeptical. They’ve seen the IRS post job openings before, only to have the agency fall far short of its hiring targets or have newly-hired co-workers leave their jobs within months due to frustrating working conditions.

“Speeding up the hiring process is one thing and it can help, but you still have to get people interested,” she says. “You have to raise salaries to encourage people to come.

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