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Auspicious or Ominous: IRS Increases Workforce by 14% in One Year

By Anthony P. Daddino on August 16, 2023
Within one year of its funding boost through the Inflation Reduction Act, the IRS has increased its workforce by nearly 11,000 workers, a 14% increase over 2022 staffing levels. Too fast too soon or just in time?

In my humble opinion, “too fast, too soon” rings true. The IRS has only officially awoken from its COVID slumber since June 2022, when IRS offices reopened. During the pandemic, the IRS experienced more than its fair share of retirements, and the number of those retiring may be increasing in the years to come. In a previous blogpost (linked HERE), we reported on the IRS’ Strategic Plan 2022-2026, wherein the IRS disclosed that 52,000 of its employees will be eligible for retirement over the next six years. With less seasoned IRS personnel to train new hires, we expressed concerned that the IRS would resort to “on-the-job” training, where the IRS shifts its training burden to tax practitioners representing taxpayers in audit. Ask any tax practitioner and they will tell you: veteran auditors focus quickly and develop discrete issues worth debating; green auditors embark on fishing expeditions that result in numerous adjustments on issues that are mostly meritless.

The IRS Commissioner commented on this staffing increase as part of a broader August 16, 2023 “report card” given by the IRS following the Inflation Reduction Act (linked HERE).

Anecdotally, there is little question that the IRS has put these new hires to work – especially within the IRS Examination division. While we continue to see the IRS pour resources into perceived tax shelters (i.e., micro captives, conservation easements, monetized installment sales, Malta pension plans, etc.), during 2023 we have witnessed first-hand an increase in the number of traditional IRS audits – especially among affluent families and their closely held businesses.

Whether auspicious or ominous, one thing is certain: there are challenges ahead for the IRS, tax practitioners, and taxpayers alike.

If you have any questions about this blog post or any other tax-related topic, feel free to contact me at (214) 749-2464 or adaddino@meadowscollier.com.