IRS Plans Massive Hiring Wave, Tech Upgrades with $80 Billion Investment

The U.S. Internal Revenue Service (IRS) announced its intention to hire nearly 30,000 new employees and implement new technology over the next two years as part of an $80 billion investment strategy aimed at bolstering tax enforcement and enhancing customer service. The tax agency unveiled its Strategic Operating Plan, which detailed the allocation of roughly $8.64 billion of the new funding for the 2023 and 2024 fiscal years, with 8,782 of the new hires being enforcement staff.

U.S. Deputy Treasury Secretary Wally Adeyemo stated, "The IRS is going to hire more data scientists than they ever have for enforcement purposes." These data scientists will work alongside traditional tax attorneys and revenue agents, utilizing new data analytics technology to identify audit targets.

The IRS will also prioritize customer service by hiring 13,883 full-time-equivalent staff over the two-year period, following the recent addition of 5,000 new taxpayer services employees to handle phone calls, reopen taxpayer assistance centers, and process tax returns.

However, a considerable number of the new hires will replace nearly 12,000 IRS employees anticipated to retire within the next two years, including over 4,700 enforcement staff, according to a U.S. Treasury official.

Last year's climate-focused Inflation Reduction Act provided the $80 billion in new funding to help the IRS rebuild its audit capabilities and replace outdated computer technology after years of funding cuts, primarily from Republican-controlled Congresses. The funding is also intended to address the "tax gap" - the difference between taxes owed and taxes paid - which the Treasury estimates to be around $600 billion annually. The IRS will focus new audits on the wealthiest Americans.

The Congressional Budget Office projects that the new funding will generate approximately $204 billion in new revenue over the next decade, which helped finance the Inflation Reduction Act investments. The Treasury has estimated figures as high as $400 billion over the decade, with higher collections extending beyond the 10-year budget window.

New IRS Commissioner Danny Werfel said that the agency would soon release hiring and spending plans for the 2025 fiscal year and would continuously update the operating plan. Werfel emphasized that the IRS's ability to implement new technology to automate numerous functions would influence future staffing requirements.