From the U.S. Government Accountability Office, www.gao.gov Transcript for: IRS Staffing Description: How are staffing shortages at IRS affecting its role as the nation’s tax collector? We discuss in this edition of the Watchdog Report. Related GAO Work: GAO-19-176: Internal Revenue Service: Strategic Human Capital Management is Needed to Address Serious Risks to IRS's Mission Released: March 2019 [ Background ] [ Jay McTigue: ] Ultimately, the ability of IRS to provide customer service and enforce tax laws comes down to its people. [ Matt Oldham: ] Welcome to GAO's Watchdog Report, your source for news and information from the US Government Accountability Office. I'm Matt Oldham. IRS staffing has declined every year since 2011, and this decline, about 20 percent, has created skill gaps for the agency. This occurs when not enough people are hired to replace employees with critical skills. I'm with Jay McTigue, a Strategic Issues Director at GAO, and he led a report looking at the staffing issues the IRS is dealing with. Thank you for joining me, Jay. [ Jay McTigue: ] Thank you, Matt. It's good to be here. [ Matt Oldham: ] Could staffing issues threaten the IRS's ability to mail out tax refunds? [ Jay McTigue: ] It could. Going back to IRS's mission, IRS's mission is to provide American taxpayers with top-quality service by helping them understand and meet their tax responsibilities, as they do during filing season. In addition to this, IRS is also responsible for enforcing the tax laws with integrity and fairness to all, and key to fulfilling this mission is IRS's workforce, and with the decline, it's, we think, entering a critical stage. As you mentioned, since the early part of this decade, in response to the significant budget pressures, IRS took a number of actions to control labor-related costs, including a hiring freeze, reductions in training, and scaling back on strategic workforce-planning activities, which we think are critical and highlight in this current report. [ Matt Oldham: ] What areas did you find were the most affected by the staffing shortage? [ Jay McTigue: ] We did find that the greatest reductions in services occurred on the enforcement side, where IRS is tasked with trying to get noncompliant taxpayers to fulfill their tax responsibilities. And audit rates have declined dramatically. On the individual side, they're down by nearly 40 percent. On the business side, multimillion-dollar corporations, the audit rate is down by over 50 percent. [ Matt Oldham: ] Is it safe to assume this means that the IRS is not finding as many tax scofflaws as they would? [ Jay McTigue: ] I think that's the logical conclusion. [ Matt Oldham: ] So, what are some of the staffing challenges the IRS is facing? [ Jay McTigue: ] That's a great question. Number one, IRS has to identify where those staffing needs are, and that's why we talk about it in the report. IRS needs to look to find out where it's facing the most critical skill gaps, and what areas, which mission-critical functions have the greatest skill gaps, and then go through a process to prioritize filling those gaps. And also, looking toward the future, the skills IRS needs today are not going to be the same skills it needs in the future. [ Background Music ] [ Matt Oldham: ] So, it sounds like a shortage of workers at the IRS threatens some of their key functions, notably enforcement activities. So, how can the IRS reverse its course? Is it as simple as recommending that they hire more people? [ Jay McTigue: ] Well, I think IRS has recognized the challenge. In 2017, they began a strategic human capital initiative to identify the key positions and skills that are needed both today and in the future. This will take time. IRS can't just stop and focus on this. It also has to continue to provide a high level of customer service right now during the filing season, for example, and throughout the year, as well. It's also in the midst of implementing the new tax law, the Tax Cuts and Jobs Act of 2017, and that has been a major undertaking requiring significant resources, as well. [ Matt Oldham: ] Final question. What do you think is the bottom line of this report? [ Jay McTigue: ] Matt, ultimately the ability of IRS to provide customer service and enforce tax laws comes down to its people. For several years, IRS has been losing people with the knowledge and skills needed to conduct the core functions of the agency. Developing a strategic workforce plan and ensuring its successful implementation is what IRS needs to do, and although it's a significant effort, it comes down to perhaps the most important payoff; an IRS well positioned to help taxpayers be compliant with tax laws and collect the revenue needed to fund the federal government. [ Matt Oldham: ] Jay McTigue was talking about his GAO report on IRS staffing challenges. Thank you for your time, Jay. [ Jay McTigue: ] Thank you, Matt. [ Background Music ] [ Matt Oldham: ] And thank you for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple Podcasts. [ Background Music ] [ Matt Oldham: ] For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at gao.gov.