Too big too fast? Skeptics see dangers in IRS rush to expand

The Border Patrol, under orders to double in size, went on a massive hiring spree about 15 years ago, relaxing standards and cutting training to bring 8,000 more agents on board.

The agency quickly realized it had a problem: Agent-involved shootings rose, and drug cartels tried to plant operatives among the new hires. Congress had to step in and pass an anti-corruption law to try to patch up the problems.

Fast-forward, and now it’s the IRS that’s preparing to staff up. The agency is flush with cash from Capitol Hill, where lawmakers said they want a backlog of cases cleared and more revenue secured from taxpayers.

Experts say the IRS could repeat the mistakes of the Border Patrol as it scrounges for qualified recruits and cuts corners to bring them on board quickly.

“Because the job market is so tight, they’re going to be getting bottom-of-the-barrel folks. Not to be mean about it, but it’s true,” said Chris Edwards, a scholar at the libertarian Cato Institute who tracks government bureaucracies. “The IRS is going to have a real problem hiring quality people. It seems to me that’s what they really need.”

Russell Vought agreed. The head of the Office of Management and Budget in the Trump administration said the IRS needs the types of people working at private accounting firms but is unlikely to lure them away from their jobs.

SEE ALSO: Taxpayer Advocates leave their clients in the lurch in challenging IRS

“That’s going to be a huge issue for them,” he said. “I think they’re going to have to lower their standards.”

Congress earmarked roughly $80 billion for the IRS in the climate change spending bill Democrats powered through Congress over the summer. The money was split into three broad pots: $46 billion for enforcement, $6 billion for taxpayer services and the rest for support.

Treasury Secretary Janet Yellen, whose department includes the tax collection service, said she wants thousands more employees answering taxpayers’ calls and investments in better technology to process returns automatically.

The enforcement money has attracted the most attention, though, and things remain murky on that score.

Ms. Yellen has ordered the IRS to ensure that audit rates on households making less than $400,000 do not rise and said the enforcement is supposed to be targeted at the wealthy. Top IRS officials estimated that $574 billion in legally owed taxes went uncollected in 2019 because of a lack of agency manpower. The number may have shot up since then.

The IRS is already at a disadvantage trying to collect that money.

Going after the bigger fish means more complex audits, and that requires special knowledge and accounting skills. Just before passing the bill last year, lawmakers stripped language allowing expedited hiring of people with those skills.

Now, the IRS will struggle to get the people it needs on board quickly, the nonpartisan Congressional Budget Office has said, and hiring less-experienced employees will require additional training.

“As a result of the hiring challenges, the IRS will collect less revenues, CBO projects, than would have been the case if the enacted law had included the language providing personnel flexibility,” the budget office concluded. It put the damage in the billions of dollars.

Suitability screening

The IRS makes clear that it won’t rule out hiring people who are in arrears on their taxes.

In a recent information session, an IRS recruiter told people interested in becoming revenue agents that they can still apply and can be selected if they are delinquent. The only hurdle is a commitment to clearing it up before they are officially brought on board.

“We understand you may not have all of the money to pay. What I suggest you do is pay as much as you can, and the remainder, enter into a payment agreement,” the recruiter said. “And you need to adhere to that installment agreement.”

IRS employees with tax problems aren’t new. The agency’s inspector general has repeatedly found employees in arrears, including some instances in which staffers refused to file returns.

IRS officials say problems are not as bad in the agency as in the rest of the country. After one report in 2015, the agency’s commissioner said 99% of the IRS’s 85,000 employees were compliant with their taxes, compared with 96% for federal employees as a whole and 92% for the general public.

During pandemic-era hiring, the inspector general dinged the IRS for hiring workers without completing fingerprinting or verifying their identities. Auditors didn’t note any breaches but said the agency could have put taxpayers’ data at risk.

In response to questions from The Washington Times for this article, the IRS said it conducts a “suitability screening” and a background check on every hire. The more sensitive the position, the more intense the investigation, the agency said.

Under a 2019 law, the IRS is not allowed to hire back employees it has fired. That law also pushed the agency to improve its training, including with the online training tool known as IRS University, or IRSU.

“With the recent passage of the Inflation Reduction Act, IRS received funding to modernize and improve the taxpayer and employee experience, including further enhancements to IRSU and training for new employees,” the agency said.

This isn’t the first time the IRS has undergone a major reorganization.

Yet Pete Sepp, president of the National Taxpayers Union, said the process has never been so rudderless.

He said Congress led the reorganization in the late 1990s by passing detailed legislation, serving as an “equal partner” and giving instructions on staffing up the agency.

This time, because of the budget process Democrats used to sidestep a Senate filibuster, the reform’s backers weren’t able to go into those kinds of details. They did the equivalent of tossing nearly $80 billion to the IRS and telling the agency to spend it how it wanted.

Now, Mr. Sepp said, Congress needs to play catch-up.

“Job One for the new Congress is to start a rigorous oversight process for this funding,” he said. “Even the most strident partisan advocates for the funding tranche ought to be able to acknowledge Congress needs a bigger role, and it needs it fast.”

Mr. Vought, the former OMB head, said he wants Congress to trim the funding.

“The sheer size of what you’re asking the IRS to grow by in a short period, there’s just no way there’s not going to be massive waste and abuse,” he said.

He and Mr. Edwards said the agency lacks the management culture to staff up successfully.

Mr. Edwards said pumping money into customer service could pay off better than spending more on audits. Most taxpayers want to pay what they owe but often get snared by the complexities of the system.

Then there’s the antiquated technology. An automated letter-opening machine in the IRS’s Kansas City processing center was accidentally slicing taxpayers’ correspondence, forcing employees to tape the letters back together by hand. A machine to automate checking for tax payments in letters was so unpredictable that employees turned it off and left the rest of the sorting to people. That cost the agency more than $400 million in lost interest because the check deposits were delayed.

Bad apples

The Border Patrol’s struggles in quick staffing were not the first.

When the D.C. Metropolitan Police Department went on a crash hiring spree in the late 1980s, it skipped background checks and rushed training. It then found itself with some seriously rotten apples.

The Washington Post reported on one academy recruit who got his acceptance letter while sitting in jail on drug distribution charges. He got out of jail, was sworn in as a cadet and began classes at the academy — while heading back to the streets to sell PCP again.

Experts who talked to The Times for this article said the lessons are still valid even though a law enforcement agency isn’t the same as the IRS, which straddles civil and criminal lines.

Mr. Edwards said the IRS is the federal government’s most potent agency and can flex extraordinary powers to pursue Americans’ money.

That’s all the more reason the agency needs to operate legitimately, Mr. Edwards said.

“I don’t want an IRS twice the size. What they need is better customer service,” he said.