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Republicans call it an 'army' but IRS hires will replace retirees, do IT, says Treasury

[August 19, 2022] By David Lawder

WASHINGTON (Reuters) - New U.S. Internal Revenue Service (IRS) hires over the next decade will mainly replace retiring Baby Boomers, answer taxpayer questions and program new computers, U.S. Treasury officials and tax experts said, responding to Republican claims that the IRS will recruit 87,000 new agents to harass Americans on their taxes.

The Republican attack ads and social media messages follow a decade of Republican-passed budget cuts in Congress for the IRS, leaving it with 16,000 fewer employees in 2021 than it had in 2010. The agency is responsible for collecting the bulk of nearly $5 trillion in annual U.S. revenues.

Days after President Joe Biden signed the Inflation Reduction Act that includes $80 billion in new IRS funding over 10 years, Republicans including Florida Governor Ron DeSantis have continued criticizing that funding on social media.

"I think it was basically a middle finger to the American public that this is what they think of you," DeSantis told a news conference on Wednesday. "All the problems we have to deal with and they think the way is to do 87,000 IRS agents."

Kevin McCarthy, the top Republican in the House of Representatives, has said Democrats plan to hire an "army of 87,000 IRS agents," more than the population of Biden's hometown of Scranton, Pennsylvania.

Others, including Republican Representative Marjorie Taylor Green, have repeatedly said that 87,000 new agents would be armed.

A Reuters Fact Check found that only 2,100 special agents in the IRS Criminal Investigation branch are authorized to carry firearms.

The 87,000 figure does exist, buried within a May 2021 Treasury Department report when the Biden administration was pushing a bigger spending bill with the same $80 billion IRS funding. The report estimated the money could fund 86,852 full-time hires through 2031.

But the actual net staff increase would be far lower, as the IRS expects over 50,000 employees to retire over the next five years alone, said Natasha Sarin, Treasury counselor for tax policy and administration.

Claims that all 87,000 would be auditors, criminal enforcement agents or armed are "deeply dangerous nonsense - and false," Sarin told Reuters.

"The speed and voracity with which (Republicans) are coming at this is really a testament to how important these resources are going to be - because there are many wealthy tax evaders that stand to lose a lot," Sarin said.

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A security camera hangs near a corner of the U.S. Internal Revenue Service (IRS) building in Washington May 27, 2015. REUTERS/Jonathan Ernst/File Photo

The new resources are aimed at closing an estimated $600 billion annual "tax gap" - taxes owed but unpaid - by cracking down on evasion by the wealthy, especially those with opaque income sources.

The Congressional Budget Office has estimated the funding would increase federal revenues by $204 billion over 10 years - key to climate and healthcare spending.

U.S. Treasury Secretary Janet Yellen directed IRS Commissioner Charles Rettig this week to produce a $80 billion spending and hiring plan within six months, but not to boost scrutiny on people earning under $400,000.

Sarin declined to say how many revenue agents the IRS wants to hire - a job category that stood at 8,321 in fiscal 2021.

MAKING THE IRS MORE LIKE ONLINE BANKING

After making up for attrition, the IRS hiring plan includes tens of thousands of new customer service personnel and information technology specialists.

These hires will develop technology tools to identify more high-end audit targets and provide a customer experience on par with online banking, she said.

"We’ll have an IRS that is able to serve Americans the way that they deserve. That means an IRS, for example, that is able to answer the phones," Sarin added.

Representative Kevin Brady, the top Republican on the tax-writing House Ways and Means Committee, disputed Treasury's assertion that many of the new hires would replace retirees, his office saying on Twitter, "the existing budget can replace them. These are all new."

To target wealthy taxpayers and handle sophisticated audits, Sarin said the IRS needs mid-career individuals with accounting and often tax law experience.

Janet Holtzblatt, a senior fellow with the Tax Policy Center, a Washington think tank, said it will be difficult for the IRS to compete with the private sector for experienced employees in a tight labor market as the IRS has salary limitations based on federal pay scales.

"From the IRS' perspective, one area where they might be able to compete on is offering a better quality of life," Holtzblatt said. This includes more job security, government health care, pension benefits and regular working hours.

(Reporting by David Lawder; Editing by Heather Timmons and Josie Kao)

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