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The IRS received tens of millions of tax returns in the first few days of this year’s tax filing season, and is prepared to issue a third round of stimulus payments to individuals if Congress approves it in the latest round of pandemic spending.
The filing season opened Friday, Feb. 12, a later start than in recent years that give the IRS more time to finish programming and testing its IT systems.
IRS Commissioner Chuck Rettig told the House Appropriations Committee’s financial services and general government subcommittee that the agency received 55 million tax returns by the end of the filing season’s first weekend, and handled up to 335 submissions per second.
The IRS is bringing more employees back to the office to process tax returns, open mail and make sure eligible Americans receive their Economic Impact Payments. Rettig said the IRS is open to the possibility of extending this year’s filing season deadline like it did last year, but added he currently doesn’t see the need to extend the deadline.
The IRS has issued more than 300 million EIPs worth more than $400 billion. Rettig said the IRS learned lessons from the first round of EIPs that improved the rollout of the second wave of stimulus payments.
If Congress approves the Biden administration’s request to give eligible individuals a third pandemic stimulus payment of $1,400, Rettig said the IRS is prepared to handle the third wave of payments.
“We think we’re prepared to appropriately serve the American people, but we know that we can do more and we know that we’re being called upon to do more and more. Let me assure you that our employees want to do more. We take our tasks to heart,” Rettig said.
To enable IRS employees to do more, Rettig is calling on Congress to provide the agency with enough resources to pay for workforce training required under the Taxpayer First Act and multi-year funding to support the agency’s six-year IT modernization plan.
The IRS in a recent report estimated it will need $4 billion in multi-year funding over the next five years to meet its goals under the legislation and its IT modernization plan.
Absent multi-year funding, Rettig asked lawmakers to provide at least “consistent, adequate” annual appropriations. He told lawmakers last November that IT modernization efforts remain underfunded and are falling behind schedule.
“One-year funding, not following up the next year, does put a stress on our resources, as we end up having to borrow, to the extent we can, from one side to help fund another portion of the agency,” Rettig said.
Subcommittee Chairman Mike Quigley (D-Ill.) said the expanded IRS role as a benefits provider during the pandemic has pushed the agency to its limits.
“In a normal year providing quality customer service and timely refunds is a challenge, but these tests are now compounded and the IRS is stretched thin,” Quigley said.
With more employees required to work in the office during the filing season, Quigley said it’s crucial the IRS adhere to COVID-19 safety protocols and communicate with the National Treasury Employees Union on COVID concerns.
Rettig said he’s worked closely with NTEU President Tony Reardon. The two officials called each other weekly during much of 2020 to discuss employee safety and COVID-19 precautions.
“We’re totally in sync in terms of protecting our employees and recognizing the duty that we had to the country,” Rettig said.
Those workforce cuts impacted all areas of the agency’s operations.
The IRS has 13,760 customer service representatives that answer the phone when taxpayers call the agency with questions. For the IRS to answer 75% of the calls it receives, Rettig said the agency would need about 20,000 call center employees.
However, the Federal Emergency Management Agency has 200 of those employees on loan this week to respond to the winter storm in Texas.
FEMA, he added, can pull as many as 2,000 IRS call center employees to support its response to hurricanes, wildfires and other natural disasters.
“Essentially, we flip a switch and our people go from being an IRS CSR to doing intake for FEMA. We get called upon for a lot of different tasks,” Rettig said.
Rettig said the IRS has enough funding right now to answer about half of its incoming calls, but its goal is to be able to answer 75% of calls by 2023. Staffing up to answer 10% more calls, however, would cost the agency an additional $100 million.
Rettig said the agency is expanding its use of chatbots, which allow call-center employees to answer four times as many taxpayer questions as if they picked up the phone.
But Rettig said the IRS will “never lose its traditional lines of communication,” including phone and in-person tax help.
Workforce shortages have also limited what the enforcement side of the agency can do.
The IRS eased up on its enforcement activity during the pandemic last year, as part of a “People’s First” initiative, but Rettig said the agency didn’t pull back on enforcement activity for high-income taxpayers.
However, Rettig said the agency needs more experienced revenue agents to pursue some of its biggest cases. A hiring freeze from 2011 to 2018, however, has created significant workforce challenges.
“I can’t hire a revenue agent, and then the next year have that person be, with five years of experience, trained to go out against the high-income taxpayer communities,” Rettig said.
Meanwhile, the IRS has had to pull some of its most experienced revenue agents to train less experienced enforcement employees.