IRS Defends Proposed Hiring Surge Amid Pushback

The head of the Internal Revenue Service on Tuesday defended Biden administration plans to dramatically boost the agency's workforce from detractors who said the IRS would abuse its authority and could not handle the massive funding surge anyway. 

IRS is looking to bring on more than 6,000 employees in fiscal 2022 under Biden’s proposed budget, reversing a decade-plus trend of cuts at the agency. Commissioner Charles Rettig repeatedly pleaded with members of the Senate Finance Committee on Tuesday to provide the requisite spending surge, direct hire authority and a mandatory funding stream that would remove some uncertainty from the agency’s budget and allow it to recover from years of reductions. Absent any intervention, Rettig said, IRS will lose more than 50,000 employees over the next six years due to attrition. 

Not all lawmakers were sold on the pitch, however, questioning whether IRS’ condition was really so dire and if it could effectively spend billions of dollars in new appropriations. Sen. Mike Crapo, R-Idaho, the top Republican on the Finance panel, said too much had been made of the IRS funding decline in relation to it collecting more total tax revenue each year. The authorities it was requesting are “rare and it is important to understand whether the circumstances actually warrant” them, he said. 

Several Republicans cast doubt on the size of the tax gap—the difference between what American taxpayers owe and what the IRS actually collects each year—which Rettig estimated at as high as $1 trillion during April testimony. The lawmakers suggested the total may be much smaller and questioned whether IRS could close it. 

Rettig conceded it would take time to address the gap, noting IRS would tackle 10%-20% per year. He vowed to act quickly, however, noting his agency has already spent months developing hiring plans so IRS can hit the ground running as soon as new funding is approved. 

“We don’t plan to wait six months to implement what Congress provides to us,” Rettig said. “We will be ready.”

He added while there will be a learning curve for new hires, IRS will target not just young people but also mid and late-career staff who can enter its workforce with managerial experience and other practical skills. IRS employees demonstrated their capacity to take on challenges during the COVID-19 pandemic, Rettig said, pointing to the deployment of stimulus payments and their resilience in handling telework and return to offices. 

“Our employees are proud to do what they are doing,” he said. “Give us the proper resources and they will make you proud as well.” 

Several senators raised concerns that IRS would not focus new resources on the right targets.  

“I am concerned, on the enforcement, that we might present an undue burden on law-abiding businesses,” said Sen. Steve Daines, R-Mont.

Rettig vowed to institute accountability metrics to demonstrate how new funds were being used. He noted the agency had lost 17,000 enforcement personnel over the last decade, disproportionately from highly specialized, senior examiners who typically focus on the wealthiest individuals and corporations. Boosted enforcement would focus on high net-worth individuals, large pass throughs, corporate compliance, employment tax field examinations and non-filers with virtual currency, among others, Rettig said. He also vowed to crack down on tax preparers, who often prey on vulnerable taxpayers and those without proficiency in English. 

“If you sit in on one of the cases and you see what has happened to the individuals involved, you would be highly motivated to give us all the tools we need on the preparer world,” he said. 

Rettig also highlighted that the biggest hiring surge would go toward customer service efforts, with the goal of improving the phone answering rate to 75% of calls. During the pandemic, that rate dropped to 7%. 

Sen. Rob Portman, R-Ohio, cast skepticism that IRS could quickly and effectively bring on as many new employees as it was requesting.  

“You want smart, effective people to work with at the IRS, and the professionalism is important,” Portman said. “One of my concerns is you are asking for a lot of new people and it takes a while to train them up.”

Rettig again noted that he has plans for quickly hiring and training staff, but stressed the importance of special hiring authority that would allow his agency to sidestep many of the processes that typically slow down federal onboarding. 

“Without direct hiring authority, I cannot keep these people interested for a three-, six- or nine-month period,” the commissioner said.

IRS' funding fate will be decided later this year, as current appropriations are set to expire at the end of September. The White House and congressional Democrats will have to win at least some support from Republicans for a surge at the agency, as spending bills will require 60 votes in the Senate.