The Internal Revenue Service plans to hire an additional 600 to 700 more enforcement employees in an effort to increase its audit rate.
The IRS found money within its existing budget to hire the additional employees after a series of budget cuts in recent years at the hands of Congress.
“As we continue to operate with a constrained budget, an area of concern for all of us remains the significant decline in the number of employees across the IRS,” wrote IRS Commissioner John Koskinen in a memo to employees on Wednesday. “With our budget down more than $900 million since 2010, there are unmet needs across the IRS and there have been few opportunities to hire new employees during the last six years.”
Congress did agree last December to add $290 million to the IRS’s budget for fiscal year 2016 (for a total of $11.23 billion) after five years of budget cuts, but the budget increases were earmarked toward improving taxpayer service, combatting identity theft, and improving cybersecurity, but not for auditing taxpayers.
Koskinen said that halfway through this fiscal year, the IRS has determined that it has enough resources to hire between 600 and 700 new employees in its enforcement areas. “Our first priority for hiring this year was to address taxpayer service,” he said. “We were able to add more than 1,000 W&I employees to our taxpayer phone lines after Congress provided $290 million specifically for taxpayer service, identity theft and cybersecurity.”
He noted that the decision to hire more enforcement personnel is based on several factors, including retirements. “A key element is the large number of retirements and attrition among enforcement employees,” said Koskinen. “In previous years, job losses across the agency have helped us absorb the funding cuts we have received, but left us with large gaps in various areas across the agency. This year, we’ve determined that we have the resources available to hire these employees as a result of the rate of attrition in enforcement and your continuing dedication to find efficiencies to help us with the budget.”
Koskinen pointed out that this will be the IRS’s first significant enforcement hiring in more than five years. “This is a good development for our tax system,” he said. “When you look at the IRS overall, every dollar invested in us returns at least $4 to the Treasury. The numbers are even higher when it involves enforcement. Each enforcement position typically returns almost $10 to the U.S. Treasury for every dollar spent—and in many instances, much more.”
The IRS’s audit rate has plummeted, particularly of business taxpayers, according to a recent analysis by Syracuse University’s Transactional Records Access Clearinghouse, or TRAC, which analyzed the IRS’s records from fiscal year 2010 through fiscal year 2015. TRAC found that IRS revenue agent hours aimed at corporations with $250 million or more in assets have declined 34 percent, while unreported taxes uncovered by the IRS that would otherwise have been lost to the government dropped 64 percent (see IRS Business Audits Plummet Due to Budget Cuts).
Individual taxpayers have also been spared in recent years. Another recent analysis by TRAC found that the odds of being criminally prosecuted by the IRS have fallen as a result of budget cuts at the hands of Congress, decreasing from 13.3 per million population in fiscal year 2013 to 9.2 per million in FY 2015 (see IRS Criminal Prosecutions Continue to Decline).
Koskinen said there would be two waves of job announcements. “The first will be in the next few weeks, with announcements being posted internally and externally for many entry-level positions, primarily in SB/SE [the IRS’s Small Business/Self-Employed division]. These revenue agents, revenue officers and other enforcement positions will be posted in locations around the country,” he said. “CI [Criminal Investigation] special agents and some positions in W&I [the IRS’s Wage and Investment division] and Chief Counsel will also be part of this initial wave of hiring. As we bring in more personnel, we anticipate a second wave of hiring coming later this year, providing employees with promotional opportunities for higher-level enforcement positions, including in LB&I [the Large Business and International Division], SB/SE, TE/GE [Tax Exempt and Government Entities division] as well as positions in Appeals. Employees in the second wave of hiring will assist with high-profile enforcement areas, including international tax issues, refund fraud and identity theft.”
Koskinen explained why the new hires are in the enforcement area. “Some of you may wonder why this hiring is in just specific enforcement areas and not elsewhere across the IRS,” he wrote. “That’s because our budget is allocated to specific areas, such as tax enforcement, taxpayer service, operations support and business systems modernization. Unlike a household budget, we cannot easily move money from one area to another. When funding is available in one area, we are required to spend it in that area. Clearly, we have unmet needs in other areas that we continue to work on and I continue to discuss that with Congress and in my public speeches. The Administration’s budget proposal for 2017, if adopted by Congress, would add more than 5,000 positions across the IRS, provide you with new tools to help you do your jobs and support our ongoing Future State initiatives.”
He said the IRS’s upcoming enforcement hiring, combined with its phone assistor hires, is an essential part of the agency’s Future State efforts. “To serve taxpayers and the nation’s tax system, we clearly need more people to improve the taxpayer experience as well as our employees’ experience,” said Koskinen. “At the end of the year, we believe we will be down more than 2,000 employees for the year, bringing our loss of employees to over 17,000 since 2010. More than 5,000 of those employees have been in our enforcement area. While adding 600 to 700 new enforcement hires will not replace those who have left, it will help fill key gaps in our enforcement workforce created by years of attrition and will provide existing employees promotion and developmental opportunities, including serving as mentors and instructors for the new staff.”
The extra hiring should be an important step in the right direction, according to Koskinen. “Adding employees—combined with your continued hard work and dedication—is a sound investment for the nation,” he wrote. “Thank you all for your efforts, and I wish you a very happy Public Service Recognition Week.”
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