With the 2022 tax filing season approaching, the Internal Revenue Service is in “crisis,” as the agency does not expect to clear its backlog of 24 million tax returns until the end of the year.
As the IRS scrambles to address a backlog of tax returns, National Taxpayer Advocate Erin M. Collins warned that the public could suffer “even longer delays” than last year.
“While my report focuses primarily on the problems of 2021, I am deeply concerned about the upcoming filing season,” said Collins in a press release. “Paper is the IRS’s kryptonite, and the agency is still buried in it.”
According to four people familiar with the proposal, the Internal Revenue Service aims to hire 10,000 staffers in an effort to reduce its backlog of tens of millions of tax returns by recruiting for open positions across the agency.
According to one person familiar with the plan, the agency would ramp up recruitment for 80 different roles in the coming weeks, ranging from entry-level administrative workers to advanced engineers and tax attorneys. High-skill IT workers are among the objectives for recruitment, according to sources, who spoke on the condition of anonymity because the plan’s details have not been made public.
The agency intends to support the new recruits with funds from its existing budget, with a substantial portion of the money coming from coronavirus stimulus funding. The new positions would represent a 14% increase in the IRS staff. Officials said it is unclear how much the IRS will spend on the hiring plan, but it will be much less than President Biden’s anticipated $80 billion investment over the next decade.
The IRS had 24 million unprocessed paper returns and communications before tax season began this year, almost all of which dated back to the 2020 filing season. Taxpayer advocates and members of Congress have urged the IRS to address the backlog, emphasizing the potentially disastrous financial effects for Americans who rely on tax credits and refunds to cover basic living expenses.
According to a government official, the IRS will not be able to clear the backlog until the end of 2022. However, it is hoped that the employment increase, which is the largest at the IRS in decades, will spur a significant response to the agency’s mound of unprocessed material. It also seeks to re-establish public trust in the tax collector after the coronavirus pandemic rendered much of its workforce ineffective, hampered customer service, and resulted in a spate of unexpected retirements.
The IRS’s staffing needs have been exacerbated by recruiting difficulties and low compensation across the board. Vacancies range from entry-level positions critical to a smooth filing season to more specialized ones such as technology experts who can enhance computer systems and tax attorneys who can conduct sophisticated audits of affluent individuals and firms.
According to the sources, the IRS received permission from federal personnel officials this week to speed up the hiring process by skipping the time-consuming recruiting and vetting procedures typically used in federal employment. Officials would also be able to attract professionals from the private sector by offering competitive pay.
For years, hiring managers in the federal government have grumbled about the bottlenecks they face while looking for new employees, as well as the salary ceilings in many positions that pay more in private enterprises. By acquiring so-called direct hiring authority, the IRS will be able to streamline the recruiting process by eliminating some selection restrictions.
The agency will also be able to avoid a salary cap that has hampered the compensation of many employees for years, though it is unclear how many jobs this will cover. Experts caution, however, that the additional resources may arrive too late to prevent taxpayers from experiencing significant delays during the 2022 filing season.
Commissioner Charles Rettig said in February that 1,200 staff would be temporarily reassigned as part of a “surge team” to assist. However, according to a source familiar with the hiring plans, those employees only started their new jobs this week. According to the source, a second “surge team” is currently being created, with personnel selected from other sections across the agency.
Meanwhile, hundreds of personnel are working overtime to clear the backlog of paper and revised returns and communications from last year’s filing season, and are seeking the support of outside contractors.
The internal personnel reshuffle occurred after the IRS advertised for 5,000 new positions in the division that answers phones and handles correspondence in the hopes of laying the framework for a successful tax season this year. However, due to the tight labor market, just about 200 additional staff were hired.
Many of the new recruiting authority’s roles necessitate months of training. For example, tax examiners in the agency’s main taxpayer services division, the wage and investment division, require between eight and 18 weeks of training before they can begin working. More than 37 weeks of training is required for contact service personnel, who answer phones, respond to mail, and log data from paper returns.
It’s possible that the new IT recruitment initiatives will take even longer to pay off. The IRS is in the process of updating the backbone of the tax administration infrastructure, a software known as the “individual master file,” which was developed in the 1960s using a coding language that is now mostly obsolete.
According to the Government Accountability Office, the most optimistic projection for the project’s competition is 2030, but progress has been hindered each time Congress approves new tax rules that require the already restricted IRS workers to reprogram elements of the software.
The IRS’s administration of stimulus payments and the child care tax credit compelled the agency to shift resources away from modernization initiatives in order to address programming flaws. According to experts, this has tarnished the IRS’s image among IT workers, who believe the agency is not devoted to modernization and that top employees can be relocated at Congress’s whim.
“The IRS entered the filing season so far behind on processing that it’s going to take until December to sort through all this paperwork,” Nina Olson, executive director of the Center for Taxpayer Rights and former national taxpayer advocate, said. “If they get authority to hire people, even if they’re only bringing in 100 people at a time here and there but on a regular basis over the next months, that will help. But what it will do is allow the IRS to enter the 2023 filing season not in a hole. I don’t want people to get their hopes up about 2022 .”
According to an official familiar with the initiative, the IRS filed for direct recruiting authority from the Office of Personnel Management, the federal government’s human resources department, in the spring of 2021, but OPM denied the request, claiming it was too broad.
One of the IRS’s most significant challenges has historically been a lack of personnel. Since 2010, the agency has lost roughly 20,000 personnel. According to two agency officials acquainted with the matter, the division in charge of processing paper returns and manually transcribing them into a computer file lost around 20% of its workforce last year due to retirements and departures.
The IRS has struggled to replace staff who retire or leave for other employment due to chronic underfunding caused by Republican-mandated budget cuts over the last decade – its yearly congressional allotment adjusted for inflation has plummeted by nearly $2.5 billion in that time.
Another tidal wave could slam the agency in the near future. Another 5,590 people are expected to retire this year, according to leaders. Nearly a fifth of the 74,000-strong workforce is approaching retirement age.
The watchdog’s dire forecast followed a similar warning from IRS Commissioner Chuck Rettig, who cautioned that taxpayers could be in for a frustrating experience this filing season.
“In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs. This is frustrating for taxpayers, for IRS employees and for me,” said IRS Commissioner Chuck Rettig. “IRS employees want to do more, and we will continue in 2022 to do everything possible with the resources available to us.”
Most people have until April 18 to file their tax returns, according to the IRS. The IRS encourages people to file electronically and use direct deposit to ensure that their returns arrive on time.
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