Don't Put Core IRS Services at Risk in the Name of 'Efficiency'

An experienced IRS workforce is experiencing large-scale firings of newly hired or recently promoted probationary employees, threats of mass layoffs, and the likely closure of hundreds of facilities—all in the name of government efficiency. Almost 5,000 employees reportedly accepted DOGE’s “fork-in-the-road” deferred resignation buyout.

The IRS, like many large organizations, has redundancies within their operation—employees haven’t always been shifted to another role following improvements in technology, for example. Fixing such inefficiencies requires a balanced effort and a close look at many important functions, not an indiscriminate termination of employees across every lane of operations.

A reduction in force may be a foregone conclusion at this point, but how it is implemented can have a significant impact on millions of Americans in the coming months and years.

IRS employees readily accept that others don’t fully appreciate their role in funding most every success achieved on behalf of our country. Certainly no one wants to pay taxes. Similarly, no one should want to pick up the tab for noncompliant taxpayers.

Those who disparage the IRS often fail to comprehend that the expenses of operating our country don’t disappear if the IRS suffers, and that a disabled, underfunded IRS significantly benefits unidentified, noncompliant taxpayers at the direct expense of compliant taxpayers.

Above the entrance to IRS Headquarters is this quote from former Supreme Court Justice Oliver Wendell Holmes Jr.: “Taxes are what we pay for a civilized society.” Having a general understanding of issues facing taxpayers, many of us proudly joined the IRS to help improve our system of tax administration.

We embraced the daily challenges, struggled with a complex tax code and constant deadlines, interacted with the most sophisticated and unsophisticated individual and corporate taxpayers, and reached deep into historically underserved communities to provide meaningful assistance and guidance.

Others executed a historical takedown of a dark web child exploitation site operating in 37 countries; helped to disrupt cyber-enabled terrorist financing sites for al Qaeda, Hamas and ISIS; infiltrated international drug cartels as the lead investigators in the largest international fentanyl/opioid seizure in US history; and executed the largest ever crypto currency seizure, at $3.6 billion.

In this process, we routinely missed family gatherings and holidays. Why? Because we knew that, collectively, the IRS provides critical support for our country. The staff faces challenges head-on, knowing that Americans rely upon the agency’s success for the overall success of our country.

Randomly terminating large numbers of taxpayer service representatives will hurt the efforts of tens of millions of Americans to receive important, congressionally authorized refundable credits and tax refunds and to receive guidance and relevant information to help them file their tax returns.

The IRS has launched more digital tools in the last two years than in the previous 20 years. Technology upgrades and the onboarding of sophisticated data scientists have enhanced internal and external IRS operating systems. Modernized infrastructure technologies have created and improved popular and convenient in-person and online tools and resources.

However, these upgrades simply haven’t kept pace with the exponential increased workload, responsibilities, and challenges.

On the horizon, enhanced IRS digital self-service options will provide a private-sector-like experience, allowing taxpayers to interact almost entirely from their mobile phones. The IRS, thanks to technology, can better identify potential noncompliance and conduct meaningful, issue-focused examinations that wouldn’t have been remotely possible just a few years ago.

But the appropriate resolution of an issue requires an experienced person to be involved. The IRS needs specialized examiners and related resources to conduct examinations and determine deficiencies, as well as others to represent the agency in administrative appeals and possibly litigation. All these folks need constant training—the more experience the better—for both the agency and the taxpayer.

For decades, IRS operations have been thoroughly depleted by underfunding and annual hiring freezes adversely impacting virtually every internal and external function. To the extent taxpayer services and compliance functions existed, they were on life support.

More recently, technological enhancements have served to leverage important human resources, efficiency, and productivity. However, numerous IRS data scientists were recently terminated. It will be difficult for the IRS to be successful with mass terminations of data scientists, specialized examiners, and collectors.

Change is often difficult to accept, but this difficulty shouldn’t serve as a basis to continue to operate with organizational inefficiencies.

Through the years, the IRS has been realigned and restructured significantly to become more efficient. Often, working closely with Congress and others, the agency was able to provide meaningful assistance in identifying important changes in a manner that didn’t adversely impact critical IRS functions.

We all share a vested interest in the IRS becoming the best it can be as quickly as possible, but these efforts must be balanced such that current and future important taxpayer services and core IRS functions aren’t put at risk in the process.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Charles Rettig, a shareholder in Chamberlain Hrdlicka’s tax controversy and litigation practice, was IRS commissioner from 2018 to 2022.

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