A few ideas on how the IRS can bridge what is known as the tax gap


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With the IRS potentially receiving large budget increases in the next few years, the question is whether it can hire the people it claims to need … at a reasonable rate. A long-time federal management expert says a solution is in sight. American University Key Executive Leadership Program Professor Bob Tobias has become a member Federal Drive with Tom Temin to discuss.

Interview transcript:

Tom Temin: And Bob, hiring is, of course, in a way an obstacle to any agency because of the federal civil service system, which we value for the pay systems it embodies. But there are other ways to hire people than the usual way. And your argument is? Tell us

Bob Tobias: Well, Tom, the Internal Revenue Service has a responsibility to collect taxes from the people who owe taxes. And there is a significant gap in tax compliance. And right now, the IRS isn’t up to the job because its workforce has been reduced by 20% in recent years and its technology is lagging behind. Hence, the IRS needs to hire the right people and increase its technology capacity. And I don’t think it’s possible under the current Title 5 system. So I believe the IRS should be given the same hiring and salary flexibility as FIRREA agencies, agencies like the Securities and Exchange Commission, Consumer Financial Protection Board, and the National Credit Union Administration, which deals with Quote, the federal financial audit , deal forms, close quote. This of course also applies to the Internal Revenue Service.

Tom Temin: FIRREA, refers to the Financial Institutions Reform Recovery and Enforcement Act, which dates back to 1989. It is strange that the IRS was not included there because it is looking at so many, not just individual forms but the company forms.

Bob Tobias: Yes sir. Yes, it really is. I think they are eligible and could have been accepted. And Congress changed the original 1989 law to allow for faster recruitment and pay more to attract that talent. The IRS is in the same place and could benefit from these flexibilities.

Tom Temin: Yes, there are numerous employment flexibilities in the federal government. I think OPM identifies well over 100, but also says that research shows that most agencies might be using one or two of these, if they are even aware of it. So here’s a possibility, but it sounds like Congress is taking action to turn FIRREA authorities over to the IRS.

Bob Tobias: It would. It would require Congress to consciously give them the same flexibility as the FIRREA agencies. And they need sophisticated accountants, they need sophisticated technologists, they need sophisticated people who can answer the phone quickly and accurately. And there is no way they can meet the 20% they have now and fill the retirees’ vacancies and attract the skilled workforce without both the flexibility of pay, the flexibility of hiring and the ability to pay more.

Tom Temin: Yeah, that seems to be a problem, Bob, that goes all over the government is that Mission Creep is happening. Agencies are being given an ever greater role, mainly by Congress, but sometimes also by administrations. And then the question of the basic capacity arises.

Bob Tobias: Oh well. The IRS has been charged with the responsibility of mailing all checks to individuals due to COVID. So you were in the middle of the tax season. So they had to stop doing what they were doing and send the checks out, which required updating their technology and preventing people from doing what they normally do to pump out the checks. Now the controls were important, but the Internal Revenue Service was taken off its normal job to do something important, but it’s still not normal. And now it has to focus on collecting taxes from the people who owe taxes.

Tom Temin: We talk to Bob Tobias. He is a professor in the American University’s Key Executive Leadership Program. I sometimes wonder whether agencies go too far in using flexibilities that lie outside the recruitment systems, even though they are legally available to them. At what point does the earnings system get kind of irrelevant, and we’re at it again: I like this guy, let’s bring him in, or I like her, let’s bring her in?

Bob Tobias: Thus, the FIRREA agencies are subject to the basic performance principles. And in all these years, Tom, there has been no OIG or GAO discovery doing what you just suggested. So I’m pretty confident that using this construct will allow the IRS to do what it needs to do without hiring cousins ​​and brothers and sisters.

Tom Temin: I think this hiring flexibility idea could appear across the government. We mentioned that the IRS has many additional roles in the various pandemic responses of Congress. The same goes for small business administration. Look at how much the FDA has had to twist and turn. The Centers for Disease and Control Prevention, CDC in Atlanta. A lot of agencies have just reached their limits, and the result is a lot of confusing information leaked to the public and replenished many gaps in the programmatic setup that we saw over the past year, which in some ways makes the competency of the Government is being challenged by the public, and officials don’t necessarily do so, these are signs of a symptom.

Bob Tobias: Well, hiring flexibility has been around for a long time. And both the National Academy of Public Administration, in a recent report to the Office of Human Resources and the Office of Human Resources, say we need to address recruitment in the federal government. And I think they will. But it has to happen now, and it’s an easy fix. It only takes a few lines of code to lock the IRS in and move it forward, and it has to move forward now.

Tom Temin: I have often asked myself whether a model like the National Guard might be needed for civil institutions. There’s a certain group of a couple of 100,000, a couple of 100,000 people making their careers who have experience in some of the stuff agencies deal with and if there’s a surge like cash for clunkers or something that shows up, people could be recruited. Nevertheless, come to us for a year to get through this hump.

Bob Tobias: That’s an interesting idea, Tom. I suppose the problem with the IRS is that tax law changes so often, regulations change so often, that you really need to be an up-to-date contributor to not only keep up with the changes in the law but also the changes in art and how the IRS enforces the law. So the IRS has a large number of temporary workers who are hired during the tax return season. And they are trained and added every fall, and they usually work from mid-January to mid-June, depending on the workload. So these are like permanent, fixed-term employees, and in some of these places the IRS gets 80 or 85% of those temporary employees back, people who only want to work four or five months, and they get paid and they are entitled to health insurance. The IRS is using this temporary employment in a pretty effective way I think.

Jared Serbu: Bob Tobias is a professor in the American University’s Key Executive Leadership Program.


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