The IRS anticipates that its increased recruiting power would enable it to hire additional personnel within 40 to 45 days, rather than many months, to address a significant backlog of tax returns and communications.
Congress granted the agency direct hiring authority in the fiscal 2022 budget measure signed into law by President Joe Biden this week.
Additionally, the IRS received the largest budget in decades due to this funding measure.
IRS Commissioner Chuck Rettig stated that the agency’s recruiting flexibility and a decreased paper-based workload this filing season put the agency on schedule to eliminate its significant tax return and correspondence backlog by the end of December.
“For more than two years, we’ve requested direct hiring power to compete with the private sector, which may hire someone the following week. And it’s been a six- to eight-month process for us,” Rettig told the House Ways and Means Committee’s oversight subcommittee on Thursday.
However, the agency is still paying $15 an hour to many of its front-line staff who receive mail and process incoming tax returns.
While the private sector is generally always able to pay more than the federal government, a particularly competitive labor market during this COVID-19 epidemic has made it considerably more difficult for the IRS to recruit in-demand personnel.
According to Rettig, the agency competes for the same talent pool with retail behemoths like Amazon, Walmart, and Target.
While some of these merchants pay up to $20 per hour, Rettig stated that the IRS once paid as much as $14.57 per hour to its lowest-paid employees.
That salary, however, was boosted to $15 an hour following President Joe Biden’s signing of an executive order ensuring that the entire federal workforce, including government contractors, earned $15 an hour.
“The difference between $15 and $20 is whether they’re having lunch or supper and what they’re having.” As a result, we require support,” explained Rettig.
Rettig explained that the organization is attempting to attract new staff by offering tuition reimbursement and child care credits. Rettig said he also meets with the National Treasury Employees Union every month to discuss worker issues.
“I want our personnel to be present now and throughout ’22. I want them to be here as well in ’23,” Rettig stated. “The agency’s strength is its people.”
Rettig stated that direct recruiting authority would enable the IRS to hire employees in 40 to 45 days instead of six to eight months. He stated that the IRS spent eight months recruiting for around 5,000 submission processing staff.
While Rettig told the committee that the IRS is “moving positively,” the agency faces a long road to resolving long-standing staffing and fiscal difficulties.
According to a February Government Accountability Office study, the IRS did not fulfill its fiscal 2021 recruiting surge objectives for returns processing workers. According to the IRS, these employees lost 17% of their jobs last year, more than double the average for the whole IRS workforce.
According to the GAO, four are required to counterbalance attrition for every ten newly recruited returns processing workers.
According to Rettig, the IRS has assigned an 800-member “surge team” to oversee accounts management activities, while another 700-member team is responsible for submission processing.
Rettig stated that, barring unexpected circumstances, the IRS would erase the backlog and resume a regular case inventory by the end of the calendar year.
Meanwhile, taxpayers are handing the IRS less paper for processing.
According to Rettig, the IRS expects to receive almost 97 percent of all tax returns electronically.
In 2021, the IRS received more than 17 million paper returns. While this is just a small percentage of the total number of returns received by the agency, it nonetheless presented difficulties for the agency in processing so much paper.
“For the Internal Revenue Service, the issue has always been paper – before and during the epidemic,” Rettig explained.
Last month, National Taxpayer Advocate Erin Collins testified before the Senate Finance Committee that almost 90% of all tax returns were electronically filed.
The government has consistently advised taxpayers to file electronically to obtain their refunds promptly.
Rettig stated that it is vital for taxpayers to complete proper returns that include COVID-19 stimulus programs, such as monthly Advanced Child Credit payments and Economic Impact Payments (EIPs).
Rettig’s tenure as IRS commissioner expires in November, making this his final filing season.
While Congress approved a $12.6 billion IRS budget for the remainder of the fiscal year, the agency seeks more funds to complete its six-year IT modernization plan.
However, Ranking Member of the Subcommittee Tom Rice (R-S.C.) stated that the IRS confronts an uphill struggle winning the trust of Republican legislators and making the most use of the money it has already received.
“I believe the IRS’s biggest barrier will be convincing us, and perhaps it will be primarily or even entirely Republicans, I’m not sure, that if we throw money at the problem, it will be able to boost efficiency, and that the IRS can pull it off,” Rice said.
Meanwhile, Rettig ridiculed Sen. Rick Scott’s (R-Fla.) midterm election platform, which calls for “immediately” slashing the IRS’s funds and employees in half.
“If the IRS’s budget were slashed in half, you may be better off and save money just by shutting it down. We generate 96 percent of the gross domestic product in the United States of America.
How will you finance the programs we require and that every American deserves? Yes, efficiency is important, but slashing our budget is not the answer,” he stated.
Rettig has regularly testified before Congress that the IRS is “outgunned” in its pursuit of tax cheaters and that the tax gap between what Americans owe and what the IRS can collect might be as high as $1 trillion yearly.
However, Rettig has frequently denied assertions that the IRS audits low-income people and families at a disproportionately high rate or does not inspect high-income individuals and enterprises sufficiently.
“We examine high-income taxpayers more than any other group of taxpayers in the Internal Revenue Service,” Rettig explained.