After nearly a decade of budget cuts and a few major scandals, the Internal Revenue Service has its “help wanted” sign out again in hopes of attracting people to implement last year’s sweeping tax-overhaul law. But attracting young, long-term talent will be a challenge.
IRS officials were on the prowl at last week’s American Bar Association May conference for new lawyers to fill their ranks, with acting commissioner David Kautter making the biggest pitch during his keynote address.
“We need to hire additional employees to assist in implementation in various parts of the IRS and Treasury” Department, Kautter told a ballroom stuffed with tax attorneys. “Our IRS chief counsel’s office is one where we need additional staffing.”
In fact, the IRS needs staffers pretty much everywhere. The agency is approaching a baby bust, as many put it. Seasoned employees are retiring and few are lining up to take their place, all while the IRS begins to write regulations and provide services for the most expansive tax bill in three decades. The Treasury says the agency will need an additional 1,734 employees to roll out the trillion-dollar tax law.
In the long term, experts say that the agency needs to attract young talent who will stay with the agency and provide a continuity of expertise over decades. But the IRS has a millennial problem. More than half of the agency’s employees are over 50 years old, and 41 percent of its management workforce will be eligible to retire in the next few years.
Thanks to budget cuts and a tough time recruiting new talent, the number of employees under 30 has fallen below 3 percent. In 2015, only 650 employees out of the 77,000 IRS workers were 25 years old or younger, according to a speech by then-IRS commissioner John Koskinen.
To fill the positions, the IRS will need to overcome both the high-dollar allure of the private sector and a negative impression of the agency among young workers. The agency will need to find out what can attract ‘80s and ‘90s kids to government jobs.
“This generation of young people are interested in public service, but we haven’t done a good job of convincing them the federal government is a place where their work can matter, and where they can be innovative and they can make a significant difference,” said Tom Ross, president of the Volcker Alliance.
The Volcker Alliance, which advocates for effective government management, put out a May 8 report examining options for the federal government to help attract young talent. “Preparing Tomorrow’s Public Service” acknowledges the wave of retiring federal workers and recommended that agencies work closer with universities on crafting graduate curriculum and promoting the public-service angle when recruiting.
Ross points to several challenges for federal agencies like the IRS, one being the average wait time to be processed and hired by a federal entity is about 106 days—much longer compared to the private space. It doesn’t help that in early May the Office of Personnel Management proposed a $143 billion cut of federal retirement benefits, Ross said.
Add on top of that the difference in pay scale between public and private jobs, especially for professionals in the tax sector.
“If you are a talented tax lawyer coming out of law school, the pay in the private bar is often considerably higher,” Ross said.
Specific to the IRS is the prevailing impression of the agency among many young people: stuffy, tedious, and operating on outdated technology.
“IRS has always been seen as ‘oh it’s a bunch of accountants;’ this is the perfect time for rebranding and strategizing,” said Jovanka Balac, president of Young Government Leaders, a nonprofit that encourages young people to enter government service.
USAJobs.com, the primary clearinghouse for federal-government job openings, has more than 200 open tax jobs at the IRS and Treasury, largely in the customer service and information technology spaces. But that outreach may not be enough. The IRS hasn’t launched an official recruiting campaign yet, but Balac said they’ll need to reach beyond typical government job sites to attract young talent.
“Really focus on the social-media aspect and the college listservs, things like that. Because just posting it on USAJobs obviously will not be enough,” she said.
Congress slashed IRS funding by about 16 percent since 2010, down to $11.23 billion in 2017. That’s left an effective hiring freeze for many parts of the agency, and the number of employees at the IRS has dropped from 94,000 to 77,000 in that period, according to annual IRS data.
Budget cuts ramped up after the 2013 scandal in which Republicans accused the IRS of targeting conservative groups applying for tax-exempt status. The scandal sent morale at the agency plummeting.
But after lawmakers passed a tax code overhaul late last year, Republicans warmed to providing the IRS with more money to make sure the agency implemented their bill smoothly. In a March omnibus funding bill, lawmakers gave the agency $320 million to roll out the law, though Kautter has said the majority of that money will go toward improving IRS information technology systems.
After his speech last week at the ABA conference, Kautter said the funding boost may mark a sea change in lawmakers’ attitudes.
“I am very encouraged with the conversations that I am having on Capitol Hill,” Kautter said. I am hopeful that, for example, with respect to IRS funding that we’re close to an inflection point.”
But the tax bill’s demands on the IRS will be significant. An April 11 report by the agency’s watchdog, the Treasury Inspector General for Tax Administration, found that the IRS will need an additional 1,734 full-time equivalent employees over the next two year to properly implement the legislation.
That includes employees to write new regulations interpreting the law as well as revisions to more than 400 tax forms—at a cost of about $75,000 per form, Kautter has said.
The agency needs as many as 1,000 additional client representatives to handle taxpayer relations, such as the estimated 4 million additional phone calls and taxpayer correspondence that TIGTA expects the agency will receive, in addition to its 64 million calls in a typical year. TIGTA’s estimate also includes over 500 employees to improve the agency’s aging information technology infrastructure, some of which rely on computer software written decades ago.
Balac said that to onboard all those people, the agency should drive home the message to prospective young employees that the agency is looking to make changes, and that people should come into the IRS to help make a long-term impact on both the federal government and Americans’ pocketbooks. To do that, she proposes a considerable challenge.
“You just need to make taxes sexy,” Balac said.