First Look

IRS awards $1K bonuses to ‘surge team’ employees tackling tax return backlog

IRS surge team employees will need to continue their work cutting down the agency's pandemic-era backlog of tax returns through the end of the year, but are get...

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The IRS is telling temporarily reassigned “surge team” employees that they will need to continue their work cutting down the agency’s pandemic-era backlog of tax returns through the end of the year.

But to thank employees for their efforts, which have cut the backlog by more than half since the start of the year, the IRS is giving these frontline workers a onetime $1,000 bonus.

IRS Commissioner Chuck Rettig, in an email to IRS employees last month, said most eligible surge team employees should have received their $1,000 Special Act Award in September, with “the few remaining awards distributed later this year.”

“Recovering from this backlog and improving the taxpayer experience are critical to the IRS mission. Thank you to all the surge participants, and thanks to all of you for your continued commitment and dedication throughout the pandemic,” Rettig said.

Eligible employees must have either provided direct support to reduce the IRS inventory of tax returns or answered toll-free lines, “to allow others to work on closing this inventory,” according to Rettig.

Rettig told employees in a Sept. 2 email obtained by Federal News Network that IRS surge teams helped the agency reduce the number of returns in need of adjustment from over 5 million at the start of the year to 2.3 million as of Aug. 20.

The IRS in June completed its backlog of tax returns received in 2021, but is still dealing with a significant workload of paper tax returns filed this year.

In order for the IRS to reach its goal of bringing the backlog down to “reasonable levels by the end of the year,” as Rettig told Congress, the agency must keep surge teams ongoing through the end of the calendar year.

“I know this is difficult for some, but it’s critical we get the inventory to manageable levels to normalize our overall operations before the next filing season begins,” Rettig said. “We owe that to the taxpayers waiting for us to complete their prior and current year tax returns.”

The timing of the bonus announcement came at the end of fiscal 2022, when federal agencies typically rush to spend leftover funds appropriated by Congress for that specific fiscal year.

Tony Reardon, national president of the National Treasury Employees Union, told Federal News Network that Special Act Awards have long been available to the IRS to reward exceptional service.

With the IRS facing unprecedented backlogs and not a big enough workforce to address them, the IRS this year reassigned employees to staff up its accounts management and submission processing operations.

“Employees who were directed to address the backlog have worked tirelessly for months with limited training, intense pressure and spare resources,” Reardon said, adding that NTEU worked with the IRS to ensure agency employees got the $1,000 bonuses to recognize “exceptional results for their significant efforts.”

Reardon said IRS having to shift its workforce to deal with the backlog “highlights the negative impacts of years of funding and staffing cuts.” But the agency is looking to rebuild its workforce and upgrade its legacy IT with the $80 billion the IRS is getting over the next decade from the Inflation Reduction Act.

“The IRS, through the Inflation Reduction Act, now has the funding to hire the employees it needs to improve customer service, modernize agency technology and administer the tax code fully and fairly for all,” Reardon said.

Chad Hooper, the executive director of the Professional Managers Association, which represents IRS managers, said in August that the automatic spending cuts brought about by sequestration in 2013 forced the IRS to eliminate voluntary employee recognition programs.

“We couldn’t recognize you for your good performance, outside of what we were legally mandated to recognize you for, or what the union provided,” Hooper said.

Hooper said IRS in the Inflation Reduction Act should help restore some performance-based financial awards for, as well as bring back training and travel budgets where the IRS has made the most belt-tightening over the past decade.

Rettig told members of the House Appropriations Committee in May that the IRS was committed to “getting healthy” on the state of its backlog by the end of the year.

“It’s an absolute must that we — my terminology is pretty blunt — crush these inventories. We took people off the phones,  which did not help the level of service,” Rettig told the financial services and general government subcommittee on May 4.

It remains unclear exactly how many IRS employees will receive the $1,000 Special Act Award.

IRS in February deployed a “surge team” of 1,200 employees assigned to accounts management to help process amended returns and correspondence.

Rettig said surge teams are comprised of IRS employees that previously worked submission processing and accounts management experience, but within the last two or three years had been “promoted to another space.”

“We essentially forced them back into this,” Rettig said. “Many were very happy. Many were less than very happy because they saw themselves moving forward, but they understand the bigger task at hand.”

Rettig told Senate appropriators in May that the IRS was staffing up surge teams with employees with submission processing and accounts management experience from as far back as three or four years ago.

Rettig told the financial services and general governments subcommittee of the Senate Finance Committee on May 3 that the IRS surge teams were “absolutely working” to reduce the backlog, and that the agency was “trending in the right direction.”

“I understand how every taxpayer, how every representative, everybody wants this. Trust me, nobody wants this more than the employees of the Internal Revenue Service. They’re proud of what they do,” he said.

Rettig also told Senate appropriators that 6,000 employees were on mandatory overtime, “far beyond what we should be asking these people to do,” and that the IRS had 10,000 employees on authorized overtime.

The IRS also hired 2,500 contractors to address the backlog, and has looked at ways to upgrade its aging technology to accelerate the processing of returns.

National Taxpayer Advocate Erin Collins, in an August blog post, thanked the IRS surge teams, submission processing employees and IRS managers “for their tireless efforts during the last three filing seasons” aimed at overcoming its unprecedented paper-based workload.

“During my visits to the campuses, it was inspiring to observe the work ethic of the employees and local management. Although their daily efforts may not be observable to the public, they have worked diligently to confront the daunting and massive mountain of paper awaiting processing,” she said.

Collins has repeatedly called the IRS paper backlog the agency’s “kryptonite,” since paper tax returns require substantially more handling from IRS employees than electronically filed tax returns.

“That said, our taxpayers and employees deserve a 21st century tax administration that utilizes technology to streamline tax administration, most notably by delivering timely tax refunds. I believe IRS executives and employees wholeheartedly agree with this statement,” Collins said.

The IRS has taken other steps to increase its output. It scrapped plans in February to close its Tax Processing Center in Austin, Texas, one of three campuses that process the agency’s paper workload.

NTEU has urged the IRS to reconsider plans to close the site in Austin since May 2021, because the agency was already struggling with backlogs and staffing shortages. The Treasury Inspector General for Tax Administration (TIGTA) also urged the IRS to reconsider its closure.

In all three submission processing centers, employees are working night shifts to work on return and correspondence processing.



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