IRS to Embark on Hiring Surge As POTUS Signs Inflation Reduction Act
After months of negotiations over the sweeping spending package, the House of Representatives followed the Senate in passing the Inflation Reduction Act (H.R.5376); President Joseph Biden is scheduled to sign the legislation Tuesday afternoon. The legislation authorizes $740 billion in spending to expand the federal workforce over the next decade.
For the Internal Revenue Service (IRS), the agency will obtain additional funds agency officials have long sought to rebuild its workforce and modernize its information technology (IT) system.
In total, the legislation authorizes $80 billion for the IRS over the next ten years, roughly half of which is dedicated to tax enforcement. With the additional investment in enforcement, IT, and taxpayer services, the Department of the Treasury estimates the IRS would generate an estimated $320 billion in additional tax collections over the next ten years.
“The IRS has for too long been unable to pursue meaningful, impactful examinations of large corporate and high-net-worth taxpayers to ensure they are paying their fair share,” IRS Commissioner Charles Rettig wrote in a recent letter to lawmakers. “The resources in the reconciliation package will get us back to historical norms in areas of challenge for the agency.”
In addition to bringing on additional employees, the IRS expects to be able to make investments in its IT to improve taxpayer services. With this investment, the IRS will be able to enhance agency operations including training initiatives and increase federal tax revenues. In turn, the additional funds would help to offset upcoming legislative actions concerning plans to lower prescription drug costs and combat climate change.
If appropriated, the authorized funding would increase total IRS funding by more than 50 percent inflation adjusted. The agency received nearly $12.6 billion for fiscal year (FY) 2022.
In a report published last year, the Congressional Budget Office (CBO) stated that the IRS could expect to increase its workforce by more than twofold this similar spending plan. This analysis is also concurrent with the Treasury Department’s assessment in 2021 that 86,852 full-time IRS employees could be hired with an investment of nearly $80 billion over 10 years.
However, this does not mean that the IRS will have an additional 86,852 employees in the coming years. In fact, for the IRS to maintain current staffing levels, Commissioner Rettig told lawmakers earlier this year that the agency would need to hire 52,000 additional employees over the next six years Due to expected staff departures. Thus, the IRS could stand to gain approximately 34,000 employees over the coming decade, which would the agency in the same position it was prior to the Congressional dismantling of the Service’s workforce starting in 2010.
