Last year’s Inflation Reduction Act allotted a whole bucket of cash to the IRS ($80 billion) to modernize its ancient systems and bring on new employees, a lot of employees. At the time, we wondered where the IRS was going to find tens of thousands of people with a bachelor’s degree and 30 units of accounting willing to work for $32,357 a year (Entry Level IRS Agents start at GS-5). That story:
Well worry no more.
As you may have heard, President Joe Biden and House Speaker Kevin McCarthy (R-CA) were able to make a deal on the debt ceiling in the 10.5th hour as whichever president and whichever opposition leader always do every time the nation is about to hit its debt ceiling. That’s not what we’re talking about though because honestly, who cares. If you do care, here’s a neutral report from AP.
What we are going to talk about due its cursory relevance to the topics covered on this website is how part of the deal involves clawing back some of the $80 billion that was supposed to go toward the IRS finding these mystical unicorn agents. Said Rep. McCarthy on Fox News Sunday, “Do you know how much they’re going to spend this year for IRS agents? $1.9 billion.”
“So we repealed every single dollar they were gonna use for IRS agents. So they hired zero,” he said while making the beginnings of a jerk off motion with his hand. “So I have to come back next year, so I don’t get all of it repealed but they have none for this year. I don’t understand if you stopped all the hiring of any IRS agents that that is not a win in [North Carolina Representative Dan Bishop’s] eyes.”
So he’s saying that of that $80 billion, the debt ceiling deal rescinded $1.9 billion that will not go toward hiring agents this year.
In the last decade, the IRS lost 17,000 enforcement workers and 9,000 customer service representatives. In 2019, it had 74,454 total employees. In March 2022, then-IRS Commissioner Charles Rettig told a House of Representatives Ways and Means subcommittee the agency was competing with the likes of Amazon and Walmart for talent, and we’re talking about entry level people to process returns. Prior to President Biden signing an executive order to increase the federal worker minimum wage to $15, these people made about $14.50 an hour. “The difference between $15 and $20 is whether or not they are going to have a lunch or a dinner, and what it’s going to be,” Rettig said at that hearing.
The conversation about defunding the money that was intended to restock the aging IRS workforce is pointless really because as mentioned above, the IRS will never be able to find the tens of thousands of skilled agents it is looking for, not this year and not over ten years. The critical accountant shortage is likely to worsen, not improve. That means competing against the private sector and public accounting firms for an even smaller pool of talent. Imagine paying less than stingy public accounting firms and thinking anyone is going to work there.
Just look at the skills they want. This is from the Internal Revenue Service Inflation Reduction Act Strategic Operating Plan [PDF] released last month:
In the future, IRS employees will require a broader foundation of core competencies. We will need curious problem-solvers who are technology- and data-savvy to power new ways of operating. Through training, the workforce will transform from one where thousands of people process paper in cumbersome, manual processes to a greater share of employees who provide high-quality services to taxpayers. To become a data-centric organization, we expect the number of data scientists to grow significantly, and IRS compliance functions will rely on specialized teams who respond to increasingly complex filings. In addition to technical skills, we will seek out, cultivate and value skills like problem-solving, communication and collaboration that are critical to excellent taxpayer and employee experiences. These changes will allow us to work in more agile, innovative and proactive ways. We will embrace the increasing diversity of our growing workforce and strive to be a more inclusive and accessible place where all employees can thrive.
Finding a huge amount of those people was always going to be improbable, if not impossible, for our nation’s tax authority.