As the IRS struggles to process a later than usual tax season and ongoing challenges with getting economic impact payments to every American, the constricted staffing at the agency has proven one of the central obstacles to improving operations.
The IRS budget was reduced by 20 percent between 2010 and 2019, and the number of employees at the agency has dropped by over 20,000 people, according to Office of Personnel Management data.
Due to the pandemic, the IRS closed many of its in-person locations beginning in March to keep workers safe, but returning employees now face a backlog of approximately 5.8 million pieces of mail-in tax documents.
“Like many agencies, the IRS sought to find ways to keep its workforce safe while continuing to meet its mission. But it didn’t stand a chance. It’s gutted workforce and anachronistic IT systems were simply not enough,” Rep. Gerry Connolly, D-Va., said at an Oct. 7 House Oversight and Reform Committee hearing on the state of the IRS.
IRS Commissioner Charles Rettig said that the agency would need “consistent, timely and adequate multi-year funding” to address both the workforce challenges and IT challenges facing the agency.
“IRS employees have worked around the clock since mid-March to implement major provisions of the CARES Act, especially the economic impact payments,” Rettig said, adding that they have been offering overtime to employees in order to get through the backlog as fast as possible.
“Our phased-in reopening has been difficult, we understand, for members of Congress, for taxpayers and others, however the health and safety of our employees had to remain paramount throughout.”
The IRS was one of the first agencies to return employees to in-person work, in fact, a decision that drew criticism from federal employee groups and Congress over worries that the agency had an insufficient plan to deal with potential COVID exposure.
But even with some employees' return to the office, tax returns and economic impact payments have been slow enough to draw the frustration of members of Congress and their constituents.
“The IRS desperately needs more resources to do its job of helping taxpayers and collecting revenue,” said Erin Collins, national taxpayer advocate at the Taxpayer Advocate Service.
“It needs more taxpayer representatives, agents to assist those taxpayers and it needs more modernization of its IT systems.”
Connolly noted that the 30 percent reduction in enforcement staff at the agency is particularly concerning, as fewer investigators increases the odds that the $450 billion a year in taxes owed but not collected will be left on the table.
The IRS also has a long history of outdated IT systems that have hampered its ability to automate certain tasks and speed up necessary processes. Those challenges extend to employees' ability to perform tasks while out of the office.
“May of IRS’s employees do have the ability to work remotely, but some of them didn’t. For example, those in customer service positions, those opening mail can’t do that work remotely,” said Vijay D’Souza.
“To the extent that we can change work processes to allow more of those IRS folks to do work remotely, I think that would have longer-term benefits beyond the pandemic.”