After shedding more than a quarter of its employees last year, the IRS is looking for opportunities to eliminate and consolidate office space.
Before the Trump administration, the IRS workforce had about 100,000 employees, but now has fewer than 75,000 full-time staff. Most employees either accepted voluntary separation incentives or retired.
IRS Chief Financial Officer Todd Newnam said at an industry conference on Thursday that the agency is looking at opportunities to shrink its real estate footprint to reflect a smaller workforce.
Newnam said several IRS facilities have become underutilized following staffing cuts, and that the agency is looking to shrink its real estate footprint as part of an agency-wide “efficiency initiative.”
“We have a series of consolidation opportunities that are going on with respect to facilities. As everyone knows, a lot of work is done remotely these days. We have a number of facilities that have one, two people in them. And it begs the question of, why do we need those remote sites when we can have things done on a remote basis? And how can we get consolidation out of the facilities, both internally at the IRS, and also with agencies like the SSA or otherwise,” Newnam said at an annual conference hosted by the Association of Government Accountants.
IRS Chief Executive Officer Frank Bisignano, who oversees the agency’s day-to-day operations, also serves as the head of the Social Security Administration.
The Department of Government Efficiency embarked on an aggressive push to eliminate leases for federal office space last year. Early in the Trump administration, the Washington Post reported that the General Services Administration, at DOGE’s urging, sought to close more than 100 taxpayer assistance centers.
Newnam said that, in some cases, the agency could reduce costs through workplace flexibilities like telework or remote work. Immediately after taking office, President Donald Trump directed employees to return to the office full-time. The IRS and many other agencies initially struggled to find enough office space to accommodate more employees.
Last summer, the Treasury Inspector General for Tax Administration, at the request of the Treasury Department, reviewed whether IRS employees were showing up in the office full-time.
Newnam said the IRS may allow more flexible work arrangements, if that allows the agency to operate “in the most efficient, effective way possible.”
“In some cases, that may yield some remote work for others. But we need to put it through the lens of what’s the appropriate thing for not only where we are today, but where we’re going to be five, 10 years from now,” he said.
Newnam said the IRS won’t need as many facilities, because the agency is launching initiatives that will make it easier for taxpayers to get assistance online, rather than call or seek in-person help.
“We needed a lot more facilities before, because people didn’t do things online. They did things in person. We still have to touch that part of the taxpayer base that needs the in-person thing, but we need to do it officially. We don’t need facilities necessarily that have one person working in them,” he said.
Despite recent workforce cuts, the current IRS workforce is roughly the same size as it’s been in recent years. The agency received nearly $80 billion in the 2022 Inflation Reduction Act to rebuild its depleted workforce and modernize some of the oldest legacy IT systems still running in the federal government. Republican lawmakers, however, have repeatedly rescinded most of those funds.
Newnam said the IRS doesn’t need a larger workforce, because the agency’s paper-based workload is shrinking, and the agency has invested billions of dollars in digitization projects to further wean itself off paper.
“We have a big cost focus on efficiency — trying to make sure that we’re spending our dollars most effectively. We’re reviewing all of the various programs and asking, ‘Do we really need all of this or that?’ And what are we paying for it?” he said.
Some parts of the IRS workforce have seen more severe workforce cuts than others. IRS Chief Information Officer Kaschit Pandya said Wednesday that the agency lost about 40% of its IT workforce and 80% of its tech executives last year — deeper cuts than were previously reported.
“Part of what we have to do within there is sort of rebalance where some of the people are working. There’s some teams that are heavier and some teams that are lighter, and we’re trying to find ways to maneuver around that, and make it more efficient, effective,” Newnam said.
After missing several of its hiring goals for this year’s filing season, the IRS is putting human resources and IT employees on 120-day details to assist with frontline filing season work.
Newnam said the IRS is rolling out a new “e-workforce management” system during this year’s filing season to automate the staffing and scheduling for IRS phone systems.
The system, he said, will ensure the agency has enough — but not too many — employees answering phones during peak periods, based on data from last year’s filing season and the start of this year.
“We’re trying to dynamically manage the system, where over the next couple of weeks, we’re setting the schedule for who’s supposed to be answering phones — because a lot of people who answer phones also deal with doing the returns — both the electronic and paper-filed. And the issue is, how do we get them in the right place?” Newnam said.
The IRS dialed back its “level of service” goal for taxpayer phone calls this year. The National Taxpayer Advocate, an independent watchdog within the agency, said when the IRS set higher goals, call center employees spent about a third of their workday “simply waiting for the phone to ring.”
“Last year, there was a push from the prior administration to just answer the phones essentially at all costs, and what we did is we overstaffed the calls. So literally, the average call handler was spending 25% of their time doing nothing. They were waiting on calls. What happened was we were staffing for the peak periods. We were staffing in the wrong way,” Newnam said.
The IRS is also working on Taxpayer 360, a long-awaited project that would allow employees to pull up a complete record of a taxpayer’s interactions with the IRS when they call the agency looking for help. IRS leaders across multiple administrations have said this project would make it easier for taxpayers to resolve their problems in one call, rather than having to call the agency multiple times.
Newnam said this project, once fully launched, would make IRS employees more productive in answering taxpayer calls.
“It takes a lot of training to get what we call the customer service reps, to sort of deal with all of these issues,” he said. “What we’re trying to do is to put in essentially one more modern interface where it liaises with the legacy systems and it can speed them up.”
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