Management

IRS managers are in favor of the big budget boost put forth by the Biden administration

The Professional Managers Association, which started with managers at the IRS, are solidly behind the big budget increase the agency would get under the Biden a...

Tom Temin@tteminWFED

July 13, 2021 12:46 pm

11 min read

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The Professional Managers Association, which started with managers at the IRS, are solidly behind the big budget increase the agency would get under the Biden administration’s 2022 plan. Federal Drive with Tom Temin spoke with association executive director Chad Hooper to see what else they might be hoping for.

Interview transcript:

Tom Temin: Chad, good to have you back.

Chad Hooper: Tom, thank you so much for having me.

Tom Temin: And it’s fair to say the PMA does look beyond the IRS alone at this point in history – correct?

Chad Hooper: Oh, of course, we’re very concerned about just a good government for all Americans. Of course, we want an effective tax enforcement mechanism to fund that government. But I’m a taxpayer myself, and I think that the rest of the government estate should also function appropriately.

Tom Temin: And looking at what the Biden administration has proposed for the IRS, it’s pretty drastic increase or dramatic increase, depending on your point of view. Do you think that that is all actually needed? I mean, what’s the real shortfall in your view of where the IRS now is and where it needs to be?

Chad Hooper: We support wholeheartedly of a proposal, particularly that in the infrastructure bill that would provide $40 billion to the agency over a decade to improve enforcement outcomes and to help modernize and stabilize the current system. We’ve been working on this for a long time time. And the IRS sorely needs the same level of investment. Unfortunately, to your question about whether this is how much we need, I think, in the past, probably in 98, or in 2002, the Congress could have acted earlier and saved quite a bit of money. But each year that we go by, without making this kind of large scale investment in the service, it does become more and more expensive. Currently, the service spends about a quarter of its operating budget just on stabilizing its infrastructure related to information technology. It’s an incredible waste.

Tom Temin: But on the other hand, I’ve been watching for 30 years tech systems modernization projects, and they’ve spent billions and billions and have reset it and come back and reset it again, and there’s always these fresh starts, there’s probably been a half a dozen of them in the past 30 years. And still that master tax file is impervious to updating. I know there’s a latest project that they’re working on. So is money the answer?

Chad Hooper: Thank you for bringing it up that this has been a conversation for a long time. In 1998, the Congress passed a restructuring bill that asked the IRS and challenged them to come into the digital age and have online accounts and all the things that we’ve become accustomed to in the 21st century. And then the Congress never funded that mandate. And so what I like to think about is like when you have a leak in the roof of your house, you can put some speckle over it for a few dollars this year. And then after a couple of rain storms, you’re going to need to buy more speckle. And maybe that’s all you can afford in the budget year. And that’s the IRS situation, it was always a multi billion dollar project, but the Congress would offer a couple 100 million dollars, which is not a small amount of money. And I want to stress that that is not a small amount of money. But because this is a multi year project, and it’s subject to annual appropriations, the IRS has like these fits of start and stop. And then as budget gets crunched, and then they can continue the work – and even in just over the last 10 years, you know, we’ve gone through a dozen versions of an iPhone, in the last six years we only have one version of the IRS core operating database. And so without making a substantial one time investment, or a multi year budget investment that gives the IRS the flexibility to undertake this very large scale massive project, all that the Congress is getting for their money is plugging the holes, creating solutions in-house to bridge gaps in IT. And that’s really about it. It was never enough money to do what needed to be done.

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Tom Temin: We’re speaking with Chad Hooper, he is executive director of the Professional Managers Association. And then the idea of the tax gap comes up regularly and the IRS puts in and people that support it say we need to have more enforcement, as you mentioned, more examiners, more people to close that tax gap. To tell you the truth, I’m reminded of what Thomas Jefferson said in one of his complaints against King George, he said he has erected a multitude of new offices and sent hither swarms of officers to harass our people and eat out their substance. We don’t want the IRS doing that necessarily, but what’s your feeling about the tax gap? And what would be needed to close the tax gap, If indeed there is one as large as some people think?

Chad Hooper: Yeah, absolutely. And thank you for the Jefferson quote, I wholeheartedly subscribe to that line of thinking as well. From the agency’s perspective, and from our perspective representing their leadership, the IRS does not have the capacity to harass someone, the IRS right now doesn’t have the capacity to even collect fair tax from high wealth individuals. And the reasons for that is the world since the mid 80s really became a lot more complicated from a financial perspective. When we think about the former president, I think his tax returns were famously in the news and we knew that there were dozens of like overlapping companies that flow through to each other and it’s like thousands and thousands of pages, the former president used to talk about that about his own returns. The IRS simply doesn’t have the staff or the capacity to even thoroughly audit people like that. And there are quite a few. They’re not even necessarily American taxpayers, we have plenty of taxpayers around the world who engage in the American tax system. And so as those overlapping tax complexities and this sort of internationalism that has come into the text, sphere, and now powered by a great deal of machine learning, and artificial intelligence, and really talented, very intelligent international tax lawyers have now created, it’s very easy, right, for high wealth individuals and valuable corporations to avoid as much tax as possible. And when there’s the possibility to avoid tax, which isn’t necessarily illegal, people are taking advantage of the code and all of its warts and all. That still means that there can be malfeasance and if the IRS does not have enough tools at its disposal to mine the data it has access to, there’s no way for it to be enforced in a fair fashion, right. So low income, or we’re middle income individuals, families, people like you and me, our tax lives are not complicated in comparison to a multi millionaire or a billionaire. Those folks need more time, it’s easy for us to program a computer to check, did Chad report all the money on his W2, did Tom include his 1099? But at the end of the day, how do you look across the sphere of 10,000 different partnerships and entities to understand the income of one person?

Tom Temin: And that really is a nice Ferrari, you’ve got there, Chad. What is your hope, from the PMA standpoint for the rest of what Congress does, especially with respect to the federal workforce in the budget deliberations and what they’re looking at for 2022?

Chad Hooper: Absolutely. From the perspective of the federal workforce, I would love to be able to see, the Congress sometimes has a habit of the President makes a pay recommendation for the civil service and if the Congress does nothing, then that becomes like the civil service pay increase. Personally, I take an issue with this as a taxpayer and thinking back to our founders, and the constitutional separation of powers, it is the House of Representatives that holds that appropriation authority, and to cede it to the executive regardless of who’s in office feels irresponsible. I also think it’s not respectful. Our civil servants, my members, the people across the federal government have given a lot in the last year to carry this nation through a pandemic, through economic turmoil, and have done so with relative success. Particularly we look across similarly situated nations to express a kind of recognition or appreciation by appropriating that pay increase and signing their names to it and the Congress coming together to demonstrate that they see the value of the federal workforce and the help and aid that they’ve doled out, I think I would like to see that, that’s something where I would challenge the Congress to maybe do better. At the same time, we’re very grateful to see that President Biden is recommending 2.7 or so percent pay increase for federal workers, I think it should be better than that personally. A lot of my members are doing work well below what they would earn in the private sector for similar duties. And I think the federal workforce deserves that support. Frankly, I’m also really happy to see the president’s executive orders around recruiting and retention and having more of a diverse federal workforce that looks more like the United States it serves. And I think that the Congress could do well to support those missions through funding, through additional flexibilities and hiring authorities. I think that Congress has an opportunity to be on the right side of history and to improve the lot of the federal worker. It’s no longer an attractive place to work. We used to think about federal workers having very generous benefits and very reliable pay. As someone who was a federal manager himself for about a decade just recently, that wasn’t my experience, Tom, I went from shutdown to shutdown, furlough to furlough, my health insurance was way more than it could have been at another company. There is a generous time off benefit, but that’s really about it. And if we’re hiring kids out of college now for $16 an hour to answer the phone, you could go get a job at CVS for more money than that.

Tom Temin: And I also wanted to get your perspective and what you’re hearing from members on return to work because that’s a big issue. Most of the agencies seem to be holding off till August or September. What are your members telling you they’d like to do and are hoping to do?

Chad Hooper: It’s a mix really. I think that this time really accelerated the government’s adoption of telework. And that was always a current in which we were flowing and it just sort of sort of lightning speed. We went into this like telework maximum work from home posture. I think that for the IRS specifically, there are quite a number of roles that could be unbundled from an office and would save the American taxpayers money. You’re not paying for commuting subsidies, you’re not paying for parking subsidies, you’re not paying for rent for large offices with nobody in them. I think that there’s a lot to be gained from that. At the same time, my members are leaders and want an effective and fair tax system, and they want to serve taxpayers and they want to be sure that their employees feel supported and can have learning and opportunities to connect. So a number of my members are eager to get back to work. The IRS does skew a bit older than the civil service a little bit. And so as a result, that age population tends to be more vaccinated, they tend to not have young kids at home. I’m not saying that everyone doesn’t. But for the most part, my members are kind of eager to get back into the office and see each other now and again, I don’t necessarily believe there’s a future where everyone goes back for five days a week, Tom, like how it used to be. But I think people the flexibility to balance their lives and kind of – I think the pandemic for all of us sort of refocus everyone’s priorities and trying to balance work and home.

Tom Temin: Well, I guess in a perfect world, we’d have all the people back but none of the traffic, but I don’t think that even Congress can make that happen. Chad Hooper is executive director of the Federal Managers Association. Thanks so much for joining me.

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Chad Hooper: Thank you, Tom.