IRS Should Embrace Remote-First Culture to Recruit Top Talent

It’s time for the IRS to consider a remote-first work model to enhance efficiency and attract top talent.

The Covid-19 pandemic accelerated the shift to remote work—and it has proved enduring. As restrictions lifted, many workers continued to work from home by choice. While broad return-to-office policies have rolled out in many industries, the technology sector remains a leader in telework.

The IRS’s future lies in its ability to harness advanced technology, such as artificial intelligence and machine learning, to provide superior service and more efficient processing. As the tax system becomes increasingly digital, the IRS must attract top-tier technology talent. Embracing remote work can aid in this endeavor by going to where the talent is—at home.

Remote Benefits

Remote work has been correlated with increased job satisfaction across numerous studies. It offers greater flexibility for workers not to live where they work—but to work where they live.

Data from the Treasury Department bears this out, as job postings for positions in the Treasury, including the IRS, that highlighted flexible working arrangements with a remote component attracted more applicants than those that didn’t.

Transitioning to a remote-first work model also offers an opportunity to enhance operational efficiency. With a reduced physical office footprint, the agency can save on overhead costs such as rent, utilities, maintenance, and infrastructure.

Since 2018, the IRS has reduced its physical footprint by 2 million square feet, or 8%. Nonetheless, it will spend $600 million on real estate costs in 2024, across 516 office buildings.

In 2023, a significant proportion of IRS offices had a workstation occupancy rate of 50% or less, which would suggest a large proportion of the workforce is working remotely already—at least part of the time. A lack of commitment to permanent remote work leads to inefficiencies in office space use, such as empty workstations.

IRS Commissioner Daniel Werfel indicated earlier this year that the current IRS staffing breakdown is split between remote and in-person employees. Despite this, the IRS doesn’t appear to be reducing its physical footprint at the same rate.

As of September 2023, the IRS had 82,990 permanent full-time equivalent employees, up nearly 5% from the same time in 2022. According to the 2024 IRA Strategic Operating Plan, there is more hiring to be done—in no small part in tech-intensive positions.

These positions should be remote-first from the start, which would allow the IRS to continue to reduce its physical footprint while bringing on more top-tier talent.

Attracting Technology Talent

Small technology firms have been leveraging remote work to great effect for some time, drawing applicants away from Big Tech. The work-from-home perk allows companies that can’t afford to pay top salaries to compete with larger firms and may chart a path for the IRS to do the same.

Historically, public sector positions have typically lagged behind their private sector counterparts in terms of total compensation. Offering remote work would make the IRS more competitive in the technology job market, attracting applicants who might otherwise choose more lucrative private-sector positions.

The flexibility permitted through remote work would also help the agency attract a diverse workforce, which it has done successfully for a long time. Enhanced inclusivity not only expands the talent pool but also fosters a variety of perspectives and ideas—unbound by geographical or financial constraints.

To fully adopt a remote-first approach, existing policies would need to be reformed, such as IRS distance limitations for telework locations. Current policy requires that remote work employees reside within 200 miles of their designated office. Such arbitrary limitations would need to be jettisoned in favor of employee flexibility.

A diverse and skilled, regionally unbound workforce would better meet the challenges the IRS faces as it modernizes its systems and enhances service offerings. Remote work isn’t just a step toward modernization—it’s a necessary precondition.

Challenges and Concerns

One potential challenge to implementing a remote-first model is security. Because the IRS handles highly sensitive taxpayer information, good data protection policies are of the utmost importance.

Transitioning to remote work requires comprehensive measures to safeguard against data breaches and attacks. As it turns out, research indicates remote workers are more aware of cybersecurity policies and take more precautions than in-office workers.

Workers who take charge of their own technology and handle security themselves may be motivated to take an active role in maintaining best practices, whereas in-office workers have potential to become complacent and assume security is being handled by someone else.

In the short term, the IRS would need to use its existing funding and savings from reduced office space footprints to upgrade its tech infrastructure for an expansion of remote work. This would include providing high-quality hardware, secure and stable internet connections, virtual private network connections, and access to cloud-based applications.

Supervision, accountability, and management would also need to be substantially reworked to accommodate a remote-first environment. Traditional management policies may not be effective in a setting where the goal is to reach Pareto efficiency in employee flexibility and productivity.

The IRS would need to implement performance metrics focusing on outcomes rather than hours worked. Remote-first isn’t simply about allowing workers to do their jobs from a different chair—it’s about employee flexibility to do their work when they do their best work. The IRS also should consider offering training programs to help managers and employees adapt to this new model.

Tax Is Tech

It would be simplistic to claim the future of tax is technology—but it would also be an understatement, as technology is already the cornerstone of the tax landscape.

The IRS released a modernization plan and committed to enhancing taxpayer interactions five whole years ago. The IRS identified four pillars to modernization: taxpayer experience, service improvement, modernized operations, and cybersecurity and data protection.

Embracing remote work serves all of these four pillars. If tax administration is a technology industry, and the technology sector demands a remote-first approach to work, the IRS needs to get out ahead of the curve.

Andrew Leahey is a tax and technology attorney, principal at Hunter Creek Consulting, and adjunct professor at Drexel Kline School of Law. Follow him on Mastodon at @andrew@esq.social

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