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IRS Is Deploying Mandatory Overtime and Reassignments to Address Its Backlog. Democrats Want More.

The tax agency has entered the 2022 tax season with an unprecedented number of unresolved cases.

The Internal Revenue Service should increase its use of overtime and internal employee reassignments to address backlogs of tax returns and correspondence, congressional Democrats demanded on Thursday.  

IRS has already implemented mandatory overtime for some workers and deployed “surge teams” to address its unprecedented backlog, but a bicameral group of lawmakers—and the union representing most IRS employees—said the agency should go further. IRS typically enters each year with about 1 million cases in its inventory, but it currently has 23.5 million. At a hearing on Thursday, members of the Senate Finance Committee called the situation a “crisis.” 

The agency has so far moved 1,200 employees internally to Accounts Management positions, where they will provide customer service and aid in tax return processing. It is currently standing up a second surge team and is looking to bring in outside contractors to help with initial clerical processing of tax returns. IRS has also suspended many of the automated notices it typically sends to taxpayers in hopes it will generate less customer service demand. 

“Despite steady progress, [Account Management’s] current internal resources are not sufficient to overcome this challenge,” IRS Commissioner Charles Rettig said in an email to staff earlier this month. “A servicewide initiative is underway to quickly establish an inventory surge team that will help us address the inventory, recover from this tremendous challenge and improve the taxpayer experience.”

Many of the employees detailing to the surge team left related jobs—such as customer service representatives, tax examiners and clerks—in the last two years. They will stay in their temporary roles through September. IRS is utilizing mandatory overtime, but it declined to detail to what extent. 

“This is an all-hands-on-deck situation to help people as quickly as possible and reduce the stress on employees who have been and continue to face unprecedented levels of inventory to be worked,” Rettig said. 

In their letter, nearly 50 Democrats—including most members of the Senate’s majority—called on Rettig to pursue “maximum overtime” for all employees working on the backlog and to allow employees to volunteer to join the surge teams.

“As the IRS works to eliminate the current backlog of returns and correspondence, we request you to pursue additional actions to maximize the IRS’ current workforce to address the backlog in order to reduce disruptions this filing season,” the lawmakers said. “We continue to hear from constituents who are still waiting for their 2020 tax returns, have received confusing notices about overdue payments they already paid, and cannot reach anyone at the IRS for assistance.”

Tony Reardon, president of the National Treasury Employees Union, called the proposals “practical, immediate steps” IRS can take to address its processing and customer service shortfalls. 

“NTEU supports their recommendation that the agency use volunteers from the current IRS workforce, plus additional overtime pay, for temporary reassignments to divisions that need the extra assistance,” Reardon said. 

NTEU, congressional Democrats, IRS management President Biden have repeatedly called for a surge in IRS funding, noting it has seen its budget slashed and workforce diminished over the last decade. Rettig has said his agency is overmatched, capable of completing only a small fraction of its auditing and customer service obligations. The agency is likely to see a funding boost as part of fiscal 2022 appropriations, but is currently stuck at last year’s spending level due to ongoing stopgap bills. A key piece of Biden’s Build Back Better legislation would inject $80 billion into the IRS budget over the next 10 years. 

IRS has shed 17,000 enforcement workers over the last decade, which represents only about half of the total workforce reduction since 2010. Its budget has decreased by 20% in that period, when adjusting for inflation.

Jessica Lucas-Judy, a director of strategic issues at the Government Accountability Office, told the Senate Finance Committee IRS needed to develop long-term solutions. The agency has attempted to bring back staff and expedite onboarding, but has still struggled to hire adequately and has seen an attrition rate in returns processing twice that as in the rest of the agency. 

“We recognize overtime is a necessary tool to help manage unexpected surges in workload, but it’s not sustainable to rely primarily on overtime to offset complex human capital challenges, such as reduced staffing levels and attrition,” Lucas-Judy said. 

The IRS’ National Taxpayer Advocate, Erin Collins, said the agency will not be able to address its longstanding issues until it can reduce its outstanding cases. 

“We need to put the processing backlog behind us and get the IRS out of the hole it finds itself in and the IRS to a stable and healthy condition so it can focus on its core mission,” Collins said. 

Republican members of the House Oversight and Reform Committee sent their own letter to Rettig, pointing at telework policy for exacerbating the problem. While IRS was among the first federal agencies to recall its employees back to their offices, the lawmakers requested information on how many workers remain in remote status. 

A majority of Senate Republicans also made suggestions to Rettig, saying in a letter that IRS should halt automated lien issuance, delay the collection process for filers with unanswered mail, provide targeted tax penalty relief and take other steps. 

The IRS declined to comment on congressional correspondence.