WASHINGTON – Internal Revenue Service Commissioner Danny Werfel said on Monday that the tax agency will need to boost its workforce to over 100,000 people over the next three years to achieve its modernization, service and enforcement goals and additional funding will be needed to maintain that extra capacity.

Mr. Werfel told reporters on his first anniversary in the IRS’ top job that near-term hiring will focus on improving taxpayer services and on handling complex audits.

He added that the IRS will detail its hiring plans next month in an update to its strategic operating plan for deploying some $60 billion in supplemental funding over a decade from the 2022 Inflation Reduction Act.

“We’re at 90,000 now. I think to get into a right-size position over the next two to three years, we need to be above 100,000, but not that much above 100,000,” Werfel said.

That figure would represent a more than 20,000 full-time-equivalent staff increase over the fiscal 2022 level of 79,070, which was about 9.1% below the 2013 level of 86,974, according to IRS data. IRS employment dipped to 73,519 in 2019 after years of budget cuts, mostly passed by Republican-controlled Congresses.

The overall level of increase in the IRS’ staffing would be far less than Republican accusations that the agency is building an “army” of 87,000 agents, many of them armed. That figure was derived from a 2021 Treasury report that estimated gross hiring needs to overcome a wave of IRS retirements and rebuild the workforce, but it has motivated Republicans to try to claw back funding.

A top-line fiscal 2024 spending agreement is set to cut the original $80 billion in funds back to $60 billion.

As congressional negotiators wrangle over another partial government shutdown deadline on Friday, in the midst of tax filing season, Mr. Werfel warned of potential disruptions for taxpayers in receiving refunds. He said the agency would “work within the law to keep as much open as we can, but we can’t keep everything open.”

FUTURE FUNDS

President Joe Biden’s fiscal 2025 proposed budget includes a request for an additional $104 billion in IRS funding, which Werfel said would cover later years of the 10-year budget window. Even though the supplemental funding has been cut by $20 billion, IRS will continue making near-term investments in technology at the current pace, he said.

Mr. Werfel added that there would not be enough funding in the separate, annual operating budget for the IRS to support a “new baseline” for the IRS, with the additional employees, to continue to pursue sophisticated audits and continually upgrade technology.

“So we so if we don’t add funds, then at some point we’re going to hit a cliff and we’re going to have to lose some of that capacity,” he said. – Reuters