With the President’s budget blueprint for fiscal 2015 set to be released next week, the commissioner of the Internal Revenue Service took his pleas for a budget increase to Capitol Hill this week.
Despite agreeing on a bipartisan budget deal late last year, Congress opted to keep in place much of the cuts to the IRS mandated by sequestration in 2013.
And that’s having an impact on the agency’s core missions of customer service and tax collection, IRS Commissioner John Koskinen told members of the House Appropriations Subcommittee on Financial Services and General Government during a hearing Wednesday.
“One of our biggest concerns is being able to deliver the services taxpayers need during the filing season,” he said.
The agency projects it will only be able to answer 61 percent of phone calls this year, meaning some 20 million phone calls will go unanswered. Meanwhile, taxpayers attempting to reach IRS offices are facing wait times that stretch past 20 minutes.
But Koskinen’s message didn’t necessarily find a receptive audience with Republican members of the committee.
“I don’t necessarily believe that a higher level of spending equals a higher level of service,” said Rep. Ander Crenshaw (R-Fla.), the chairman of the subcommittee. Instead, he said the IRS needs more “discipline” in its spending habits and needs to better prioritize spending.
Committee members criticize employee bonuses
The agency’s current budget — about $11.3 billion — is some $900 million less than the agency had on hand four years ago. Similarly, the agency’s workforce has downsized by about 10,000 employees.
Meanwhile, the IRS’ workload has only increased, thanks in part to new responsibilities under the Affordable Care Act and the 2010 Foreign Account Tax Compliance Act.
Personnel-related costs make up about 75 percent of the IRS budget, and there isn’t much room for savings there, Koskinen said.
“So we have to make decisions and the only places we have discretion are, in fact, tax enforcement and taxpayer services,” Koskinen said.
Republicans on the committee, however, pounced on Koskinen’s decision to award performance awards to bargaining-unit employees — awards which Koskinen’s predecessor sought to cancel last year citing budget constraints.
“What I find unacceptable is that in this $11.3 billion appropriation that the IRS received this year, that you can’t find the money to answer more than half the phone calls and yet you can find the money to pay $63 million in bonuses,” Crenshaw said. “It seems to be that might be a slap in the face to the taxpayers.”
Koskinen said about two-thirds of employees typically receive a performance-based bonus, the average size of which is about $1,200. “So, nobody’s making a lot of money,” he added.
When acting Commissioner Danny Werfel attempted to cancel the bonuses outright last year, the National Treasury Employees Union filed both a grievance and a lawsuit, contending the awards were part of the union’s bargaining agreement with the union.
Koskinen said the final deal reached with the union earlier this month means IRS will actually pay out bonuses at a lower percentage rate than the bargaining agreement called for. If he hadn’t settled with the union, the outcome of the grievance or the lawsuit could have resulted in the agency paying out larger bonuses, he added.
‘They’re doing the best they can …’
Koskinen, who was confirmed to head the embattled IRS late last year, has gone on a listening tour at IRS facilities nationwide. He said the No. 1 concern he’s heard from employees deals with staffing and resources.
“I thought I would hear more grumbling about the fact that they haven’t had a pay raise in four years or about the fact that they were working overtime because of a lack of personnel … and the constant theme has been, ‘We need more people to allow us to do the work,'” Koskinen said.
Those remarks are similar to the findings of a recent survey of IRS chapter presidents undertaken by NTEU, which found staffing and budget shortages were having a dramatic impact on both taxpayer services and the temperament of IRS workers.
Eighty percent of respondents said customer-service representatives feel they cannot do a quality job because of staffing shortages. Some 56 percent of respondents said phone hold times were longer than last year, while 63 percent said waiting lines at Taxpayer Assistance Centers were longer than last year.
“They’re doing the best they can with what they have,” NTEU National President Colleen Kelley said in a briefing with reporters Wednesday afternoon during the union’s annual legislative conference. “They’re trying to provide the services they can with the employees they have.”
Notably, the budget cuts and reduced staffing power are also draining employee morale, according to the survey. Eighty-nine percent of respondents in key customer-service positions surveyed by NTEU reported morale was at an all-time low.
The union is awaiting the President’s budget proposal for the IRS, which will be released next week along with the rest of the administration’s proposed fiscal 2015 budget .
The White House has been supportive of expanding the agency’s budget in the past, although lawmakers have rarely been receptive to any increases. And the agency would likely need even more funding than a usual year-to-year increase so it can dig out of the sequestration-budget hole Congress has left it in.
“To take them back to the staffing level that they need, I really don’t expect it to happen in one year,” Kelley said. “I think it would take a couple of years, in the best scenario, to get them back to the funding they need to be able to do the work that they’re trying to do.”