IRS prepares to hire at warp speed

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Apr 10, 2023 View in browser   By Benjamin Guggenheim Presented by SWELLING THE RANKS: New projections obtained by POLITICO Friday indicate that the IRS has a truly mammoth task ahead to achieve its hiring goals. In case you missed the story, the agency is looking to have 105,187 workers by fiscal year 2025 — a figure that takes into account the fact that two-thirds of current IRS workers will become eligible for retirement in the next six years, according to a source. To put that in full perspective, since that that same data indicates the agency had around 72,700 employees in fiscal year 2022, the IRS’s workforce is set to increase by 45 percent in less than three years. There’s also a strong likelihood — given the retirement statistic noted above — that more than half of IRS employees will be fresh faces in 2025. As noted by former IRS Commissioner Mark Everson, that kind of warp speed transformation will not be easy, especially since there’s a shortage of accountants in the labor market and not everyone is necessarily cut out for challenging audit work at the IRS. MORE ON THAT IN A BIT, but first we should note how interesting it was that these new figures weren’t included in the strategic operating plan released last Thursday in the first place. A source cautioned that the numbers are based on several assumptions and are subject to uncertainty, but that didn’t stop Republicans and fiscal conservatives from blasting the much-anticipated plan for its lack of specificity. “If this is a ‘plan,’ why does it omit how many employees the agency seeks to hire over ten years, fail to identify target audit rates for taxpayers, and lack specific details about how the money will be spent beyond the next two years?” said Ways and Means Chair Jason Smith (R-Mo.), in a statement. Also, according to the conservative Americans for Tax Reform, we tax journalists were also quite unimpressed by the report. A hearty welcome to the week from Morning Tax. Send us any tips and feedback! Email: bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. You can also reach us on Twitter at @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. A message from Intuit, serving more than 100 million customers worldwide with TurboTax, Credit Karma, QuickBooks, and Mailchimp: Tax refunds are often a family’s largest check of the year. This is especially true for low- and middle-income families, who use tax refunds to pay down debt, bolster savings, and cover critical expenses. Intuit TurboTax makes sure taxpayers get every dollar they are owed by helping them navigate benefits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). Learn more.   MORE HIRING TIDBITS: We’ve got even more new details for you, though, beyond what was included in Friday’s story. Of the 48,155 enforcement workers the agency is looking to have in 2025, 43,505 would be employed in exams in collections; 3,625 in investigations; and 1,025 in regulatory. That’s a 38 percent increase from 2022 personnel levels in exams and collections and a 21 percent increase in investigations. The IRS is also planning to employ 38,369 employees in taxpayer services by 2025, which is a 44 percent bump over 2022 levels. Of note, the agency intends to bring on an entirely novel workforce of 1,810 workers in energy security to help implement the green tax credits enacted by the Inflation Reduction Act. However, like funds for taxpayer service and business systems modernization, the IRS anticipates that the IRA money for energy security will quickly dry up and asserts that it needs $3.9 billion to properly oversee all those climate incentives. The IRS only got $500 million to support the implementation of those credits, according to the strategic operating plan. A new Treasury: Despite those projected shortfalls, the new influx of personnel would represent a pumping up of the IRS’s workforce to levels not seen for a quarter-century. According to the IRS data, agency personnel have been steadily declining for decades: the IRS’s workforce levels peaked in 1992, when it had117,000 FTEs, and the agency last had more than 105,000 FTEs in 1996. We don’t have projections yet for how many people the IRS wants to have beyond fiscal year 2025 but — given that the agency plans to slowly ramp up the amount of Inflation Reduction Act funding it uses every year — it would be reasonable to suspect that the long-term workforce could ultimately exceed 105,000 by a decent margin. COLLECTING TAX DEBT: A Congressional Research Service report published April 7 has a noteworthy point about the collection of delinquent federal tax debt that may be especially relevant in light of the IRS’s beefed-up enforcement plans. According to CRS, in April 2020 a whopping 56 percent of delinquent federal tax debt was exempt from the program, called the Federal Payment Levy Program, charged with collecting it. Wait for it: the report says that was $171 billion. As way of explanation, the Bureau of Fiscal Service within Treasury receives information from the IRS about taxpayers whose assets are subject to levy. Current law allows the bureau to levy retirement annuities, Social Security checks, and federal salaries, among other types of federal payments, up to certain limits to collect on an individual’s tax debt. But the agency does not have the power to levy the assets of people in bankruptcy proceedings, taxpayers who applied for relief as an innocent spouse, as well as those who set up payment agreements with the IRS or suffered specified hardships such as natural disasters. That’s certainly a lot of dough though. LEONARD LEO’S NON-PROFITS: In other news, a liberal watchdog group called Campaign for Accountability filed a tax-exempt organization complaint with the IRS asking the agency to examine several non-profits affiliated with conservative legal activist and Federalist Society co-chair Leonard Leo. The complaint references payments reported by POLITICO’s Heidi Przybyla from the affiliated non-profits to for-profit businesses operated by Leo for consulting, public relations, research and other kinds of services. Campaign for Accountability points out that Leo’s personal wealth ballooned as his fundraising reach grew and questions whether millions of dollars of payments from the non-profits were for actual services or were illegal tenders facilitated by Leo for his personal enrichment. “The IRS, however, with its summons, investigatory, and other related enforcement powers, would be able to compel the production of information necessary to unravel the web of potential private inurement, excess benefit, and/or and private benefit at the heart of these multimillion-dollar independent contractor payments,” the watchdog wrote.   STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.     Around the World Guardian: “Profits at Apple’s subsidiary in Ireland rise to $69bn” Also Guardian: “A property tax based on annually uprated values would be a gamechanger” Bloomberg: “UK Looks to Keep Tax Breaks in Place Despite Global 15% Rate”     Around the Nation Pew Research Center: “Top tax frustrations for Americans: The feeling that some corporations, wealthy people don’t pay fair share” Reuters: “WeWork adopts shareholder rights plan to protect ability to reduce future tax bills” Forbes: “Swipe Right On Your 1040EZ: Inside The ‘Tax Heaven 3000’ Dating Sim”   GO INSIDE THE 2023 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is proud to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage, insider nuggets and unparalleled insights from the 2023 Global Conference, which will convene leaders in health, finance, politics, philanthropy and entertainment from April 30-May 3. This year’s theme, Advancing a Thriving World, will challenge and inspire attendees to lean into building an optimistic coalition capable of tackling the issues and inequities we collectively face. Don’t miss a thing — subscribe today for a front row seat.     Also Worth Your Time KELOLAND.com: “How much tax preparers earn in each state” Bloomberg: “Can You Self-Custody Cryptocurrency Held in a Checkbook IRA?” The Desert Sun: “Owner of Coachella Valley sushi restaurants admits $1 million tax fraud”' Did you know? Dachsunds saw a steep decline in popularity during World War I because of their German heritage and use in German propaganda. Two of Kaiser Wilhelm II’s dachshunds, Wadl and Hexl, reportedly attacked Archduke Franz Ferdinand’s prized golden pheasants during a visit. A message from Intuit, serving more than 100 million customers worldwide with TurboTax, Credit Karma, QuickBooks, and Mailchimp: Tax Day is 9 days away. Right now, taxpayers across the country are working to finish their taxes before Tax Day. With the right tools and support, Americans can also begin to reach their financial goals during tax time—whether it's getting help filing for an extension or thinking about how to use their refund to save for a house. TurboTax decodes over 6,000 pages of federal tax law, and, with TurboTax Live Tax Experts ready to answer any tax questions, everyone can file taxes confidently this tax season. Learn more.     Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler Benjamin Guggenheim @ben_guggenheim   Follow us

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