The Internal Revenue Service may revive the extra payments it provided to employees in 2020 to coax them back to the office in order to increase its recruitment and retention efforts, according to a new report.
The report, released Monday by the Treasury Inspector General for Tax Administration, found that the IRS gave out over $1.5 million in recruitment, retention, or relocation incentive payments between fiscal years 2019 and 2022 to 1,466 employees from various non-IT business units. Most of that money ($900,000) went out in fiscal 2020 to entice 1,435 employees to return to work.
Now the IRS is facing shortages not only in its IT staff, where the agency has long needed to offer extra incentive pay to compete with the private sector, but in other areas too as its workforce approaches retirement age.
One of the IRS’s hiring goals is to use the extra funding it received under last year’s Inflation Reduction Act to hire 19,000 employees per year. Given the steady attrition in its workforce, the IRS expects a net increase of 5,000 to 10,000 employees per year; in general, it’s facing an 8.5% average attrition rate over the next three years. The IRS estimates it will need to hire nearly 26,000 non-IT organization employees in fiscal year 2023.
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During the pandemic, the IRS offered 12 recruitment incentives ranging from approximately $4,800 to $64,000, with an average of $21,078; along with 14 retention incentives ranging between about $200 and $27,000, with an average of $18,908; and five relocation incentives ranging from approximately $17,500 to $21,500, with an average of $20,281.
TIGTA reviewed a sample of 17 recruitment and retention incentives paid to IRS employees during fiscal years 2019 through 2021 and found they were all properly reviewed, approved and processed in compliance with the agency’s recruitment and retention incentive requirements.
The agency will need to expand its use of these special payment incentives to hire or retain mission-critical employees and reduce the ongoing personnel shortages.
“Failing to fill mission-critical positions can adversely impact the IRS’s ability to successfully accomplish its tax administration responsibilities,” said the report.
To help recruit employees, the IRS began using the critical position pay authority that Congress only recently granted it. In March and June 2019, the IRS submitted six requests to hire or retain senior executive positions designated as mission-critical, but it took nearly three years from the initial drafting of the business case to receive approval for all six hiring requests. As a result, the IRS doesn’t plan to continue using critical position pay authority.
TIGTA recommended that the service should develop workforce planning initiatives to identify more mission-critical positions on a recurring basis and expand the use of the special payment incentives it employed during the pandemic to recruit and retain highly skilled non-IT employees. The IRS agreed with TIGTA’s recommendation and plans to develop workforce demand forecasts to include consideration of special pay for mission-critical business functions, assess the health of its mission-critical occupations, and develop a strategy for using financial incentives to recruit and retain such employees.
“The IRS acknowledges that there are opportunities to expand the utilization of special payment incentives to achieve IRS staffing levels required by the Inflation Reduction Act,” the agency’s human capital officer, Traci DiMartini, wrote in response to the report. “The IRS strategic workforce planning function is a critical enabler to strengthen the internal partnerships to proactively identify key roles that will have the largest impact and return on investment for delivering the IRS transformation. The IRS human capital management strategies and procedures must evolve and enable new ways of strategically working with business units to expand the usage of special payment incentives to aid in recruitment, relocation and retention efforts.”
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