IRS Warns Taxpayers That Hiring of Tax Enforcers Will ‘Ramp Up’ Soon

The IRS building is seen in Washington on Sept. 28, 2020. Erin Scott/Reuters

The Internal Revenue Service (IRS) plans to increase its hiring of tax enforcers in coming months, the agency’s chief has revealed, putting taxpayers on higher alert as the IRS bolsters the ranks of its enforcement army.

IRS commissioner Danny Werfel made the remarks on the sidelines of the Association for Federal Enterprise Risk Management’s (AFERM) annual summit on Nov. 28.

In a keynote speech at the event, Mr. Werfel said he’s “cautiously optimistic” that the IRS can tap the $60 billion or so in extra federal funding to modernize its outdated IT systems, enhance employee training, and generally rebuild its capacities.

But in an interview with the Federal News Network after his speech, Mr. Werfel revealed that it’s been a “very busy fall” when it comes to the agency’s recruitment efforts—and that he hopes to bolster the ranks of the IRS' tax enforcement agents.

“I would expect hiring activity on the enforcement side to ramp up as we enter into 2024,” Mr. Werfel told the outlet.

‘Army’ of Tax Enforcers?

While Mr. Werfel didn’t specify what kind of hiring numbers he’s targeting, the IRS said in mid-September that it was fast-tracking the hiring of 3,700 people to assist with “expanded enforcement work” that is meant to focus on complex partnerships, big corporations, and high-income earners.

The tax enforcement positions will be open in more than 250 locations across the United States, and they are part of what the IRS has promised would be a “sweeping, historic” tax enforcement crackdown that leverages cutting-edge technology, including artificial intelligence, to catch tax evaders more effectively.

Republicans have warned that the IRS' $60 billion cash infusion from the Inflation Reduction Act would be used to hire an “army” of 87,00 tax enforcers whose work would lead to an increase in the rate of tax audits targeting ordinary Americans.

While Mr. Werfel, President Joe Biden, Treasury Secretary Janet Yellen, and others in the administration have all promised that the IRS' enhanced enforcement work would target corporations and high-income individuals (and that the tax audit rates would not increase for Americans earning less than $400,000 per year), a watchdog has cast doubt on this pledge.

The Treasury Inspector General for Tax Administration (TIGTA), which is the watchdog overseeing the IRS, said in a recent report that the tax agency could end up (perhaps inadvertently) breaking its promise not to target ordinary Americans because the IRS doesn’t have a clear definition of “high income.”

“The high-income terminology is being used loosely inside the IRS with no common understanding of what the term means,” the watchdog said.

TIGTA explained that the IRS continues to rely on old tax examination activity codes adopted half a century ago with the Tax Reform Act of 1976, which used a $200,000 threshold to measure high-income returns.

Currently, “there is no way to identify the complete population of taxpayers that meet the criterion of $400,000 or more specified by the current Treasury Secretary,” the watchdog said in its report, warning that the IRS' tax enforcers could end up casting their net more widely than its chief promised.

“When the high-income thresholds are set too low, the result can be higher numbers of inefficient examinations,” the watchdog said. “When the definition is too low, the base of taxpayers earning those incomes is wider so that the IRS does many more audits in that category in order to achieve desired audit coverage.”

Staffing dipped below 80,000 in 2015 and remained below that level until now.

Not only is the IRS looking to bolster the ranks of its tax enforcers, it’s also looking to hire more armed agents for its criminal investigations division.

Dubbed “gun-toters,” the armed special agents in the IRS Criminal Investigations (IRS-CI) unit are responsible for enforcing those parts of the tax code whose violations amount to crimes.

Mr. Werfel told lawmakers at an April 27 hearing of the House Ways and Means Committee that the IRS-CI division would hire an estimated 360 new armed agents per year over the next five years for a net gain of 1,200 after attrition due to resignation and retirement.

The IRS chief insisted, however, that the additional hires would not be used to increase the number of tax audits.

Currently, the IRS-CI division has around 2,100 armed agents. In the mid-1990s, the unit had around 3,500 special agents. Carissa Cutrell, a public affairs officer at the agency, told The Epoch Times in an earlier statement that IRS-CI loses between 150 and 175 agents each year due to retirement and attrition.