U.S. IRS to spend $80 billion to hire 30,000 new employees

As part of an $80 billion investment plan aimed at improving tax enforcement and customer service, the U.S. Internal Revenue Service plans on hiring nearly 30,000 new employees over the next two years and deploying new technology, the agency announced on Thursday.

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In its long-awaited Strategic Operating Plan, the IRS has committed approximately $8.64 billion of the new funds during the fiscal years of 2023 and 2024, and 8,782 of these new hires will be working in the enforcement branch of the agency during these years.

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"The IRS will be hiring more data scientists for enforcement purposes than it has ever done," according to U.S. Treasury Secretary. In his remarks to reporters, Deputy Treasury Secretary Wally Adeyemo said that the new data analytics technology would complement the traditional tax attorneys and revenue agents in identifying audit targets with the use of new technology.

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In addition, even after hiring 5,000 new taxpayer service employees in recent months in order to answer telephones, reopen taxpayer assistance centers, and process tax returns, the IRS will also continue to hire more staff in order to improve customer service.

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A 148-page plan from the company reveals that the hiring of 13,883 full-time-equivalent staff in the customer services department over the next two years will take place, including these new employees.

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There will be nearly 12,000 IRS employees retiring over the next two years -- including more than 4,700 enforcement staff -- and a significant portion of these newly hired employees will replace them, a U.S. Treasury official said.

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Inflation Control Act, the climate-focused legislation passed last year, provided $80 billion in new funding for rebuilding the agency's audit capabilities and modernizing its computers from the 1960s after a decade of cuts largely imposed by Republican-controlled Congresses.

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By focusing new audits on the wealthiest Americans, the program also aims to close the "tax gap" between taxes owed and those paid, estimated by Treasury to be about $600 billion a year.

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It has been estimated that the new funding will generate approximately $204 billion in new revenues over the next decade, funds that will contribute to the payment of the Inflation Reduction Act investments that enabled the investment to be made. Over the course of the decade, the Treasury has estimated that the collection will be as high as $400 billion, even with higher collections beyond the 10-year budget window.

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The IRS's new commissioner, Danny Werfel, told reporters in a statement that the agency will soon be releasing an update on its hiring plans and its spending plans in advance of the 2025 fiscal year, and the operating plan will be continually updated. In order to determine future staffing needs, he said, the agency would be able to deploy new technology in order to automate many functions, which would be beneficial to the agency.