IRS Workforce Challenged by Changing Tax Laws
The Internal Revenue Service had to cope with a great many changes in tax laws last year that put its growing workforce under extra pressure, according to a new report.
The report, by the Treasury Inspector General for Tax Administration, found that the IRS needed to contend with 56 tax provisions from the American Recovery and Reinvestment Act of 2009, along with at least 42 out of 514 provisions in the Patient Protection and Affordable Care Act of 2010 that added to or amended the Tax Code. Another eight provisions required the IRS to establish new operations.
“The IRS faced many challenges during FY 2010, including implementation of provisions related to new tax legislation,” said TIGTA Inspector General J. Russell George in a statement. “Taken together, revisions to these laws represent the largest set of tax law changes in 20 years.”
Helping the IRS to deal with all the extended, expiring and newly created tax provisions was a growing workforce. In fiscal year 2009, the IRS brought on board over 2,000 revenue agents and compliance officers, the biggest hiring increase in five years. In fiscal 2010, hiring continued to grow, with the IRS adding nearly 1,300 revenue agents and tax compliance officers. However, the increased hiring of revenue officers over those two years didn’t entirely make up for the growing workload and pace of attrition at the agency.
Recent staffing increases at the IRS have led to an increase in collection and examination enforcement personnel by 19 percent since fiscal year 2006. That compares with a 4 percent increase in the total number of IRS employees during this same period, from 103,811 employees in fiscal 2006 to 107,622 employees at the end of fiscal 2010.
The activities of the IRS’s collection function in fiscal 2010 showed mixed results compared to fiscal 2009, although the IRS continued to increase its use of collection enforcement tools. The number of delinquent accounts closed by a full payment increased, as did the amount collected on delinquent accounts. However, the collection function received more delinquent accounts than it closed, gross accounts receivable increased, and the number of tax delinquency investigation tax periods closed with the receipt of a delinquent tax return decreased. In addition, while the number of taxpayers who had delinquent accounts and delinquent returns in the queue decreased, that progress was offset by an increase in the number of these cases that were shelved.
The IRS examination function’s recent increase in revenue agents and tax compliance officers resulted in the most tax returns examined over the past five years, although the majority of those examinations were conducted via correspondence. The number of tax returns examined increased for individual, corporate, and S Corporation tax returns in fiscal 2010, while the number of partnership examinations decreased and examinations of other types of tax returns remained the same.
The no-change rates for examinations of individual income tax returns by revenue agents and tax compliance officers increased in fiscal 2010, but remained lower than the no-change rates reported back in fiscal 2006.