IRS Commissioner John Koskinen looked into his crystal ball and saw, or at least hoped for, Duke University emerging from the Final Four into the NCAA’s championship basketball game.
His prognostication for the Internal Revenue Service was much more bleak.
The Duke grad visited the National Press Club on Tuesday to deliver a pessimistic message about the agency that fuels the government. It was not hyperbole. Even as the IRS collected $3.1 trillion last year, he said, taxpayers got “truly an abysmal level of service.”
That stems directly from a punitive Congress that has denied the agency the funding and personnel needed to serve taxpayers. But Koskinen’s remarks went beyond typical budget woes to describe an agency that is in danger of having its personnel infrastructure seriously eroded.
The IRS has suffered a sharp drop in personnel, a decrease of 13,000 between 2010 and 2014, but that’s not the only problem. The decrease is exacerbated because too many staffers are old, and young people are not replacing them.
“As highly skilled employees retire, we need to replace them with the next generation of talented, dedicated people,” Koskinen said. “But that is becoming harder and harder to do, in large part as the result of the hiring freeze we have been forced to maintain for the last several years to absorb the significant cuts to our budget since 2010.”
Many in Congress aren’t inclined to provide the IRS the full funding it needs. Rep. Ander Crenshaw (R-Fla.), chairman of the Appropriations subcommittee on financial services and general government, told the Federal Diary that “more money is not the only solution. . . . The IRS has the flexibility to ensure that its limited resources are used as cost-effectively as possible.”
More than half of the IRS workforce is over 50, and 40 percent will be eligible to retire by 2019. “Meanwhile, the number of IRS employees under 30 has been steadily declining, and is now less than 3 percent of our workforce,” the commissioner said. “We only have about 1,900 employees under age 30 – and about half of those are only part-time. And we have only 650 employees who are 25 or younger. Essentially, the IRS is facing its own version of the baby bust.
“This situation makes it extremely difficult, if not impossible, for the IRS to properly develop its next generation of leaders,” he said.
It will need that next generation of leaders, because the current crop is leaving.
Since October 2011, 46 percent of the agency’s leaders have left, Koskinen said. Among the “top tier of leaders on our senior team” nearly two-thirds have departed since 2011. “The changes are so significant throughout the agency that you could hang a sign on our headquarters saying ‘Under New Management.’ ”
Keep in mind that tax issues are notoriously complex. It takes years for a tax auditor to be fully productive.
“The hiring freeze the IRS implemented to cope with reckless budget cuts imposed by Congress for five years in a row is . . . making it virtually impossible for the IRS to hire new workers to replace experienced and retiring employees,” said National Treasury Employees Union President Colleen M. Kelley. “The hiring freeze is discouraging to applicants with the skills and education the agency needs.”
Yet there is little Koskinen can do with a Congress that punishes the IRS for what he called “the problems of the past . . . overspending on conferences, making some ill-advised videos and, of course, inappropriate scrutiny of applications from groups seeking social welfare status and others.”
The IRS continues to suffer congressional repercussions.
“We deliberately lowered the IRS funding to a level to make them think twice about what they were doing and why,” Crenshaw told IRS officials in February. “They don’t have a dime to spare on anything frivolous or foolhardy or even middling. The IRS should and must focus on the most important, the most egregious and the most in need.”
But now the IRS doesn’t have enough dimes to provide taxpayers the services they deserve. Uncle Sam is poorer because of it.
The $10.9 billion IRS budget for this fiscal year is $1.2 billion less than five years ago, taking it to the lowest level since 2008. “If you adjust for inflation, our budget is now comparable to where we were in 1998,” Koskinen said. “Despite that, we’ve taken on many new additional responsibilities while our taxpayer base continues to grow by millions.”
The budget cuts mean less money for audits and collection actions, resulting in “a loss for the government of at least $2 billion in revenue that otherwise would have been collected,” he said. “This is a classic example of being penny wise and pound foolish.”
That leads to frustrated taxpayers.
“More than six out of every 10 people who call can’t reach a customer service representative,” Koskinen reported.
His conclusion: This is “really crummy customer service.”
Previous columns by Joe Davidson are available at wapo.st/JoeDavidson.