Special Pay Incentives Are Being Considered by the IRS as a Means of Boosting Employee Motivation

Special Pay Incentives Are Being Considered by the IRS as a Means of Boosting Employee Motivation.In a recent report released by the Treasury Inspector General for Tax Administration (TIGTA), it has been suggested that the Internal Revenue Service (IRS) is contemplating a revival of additional payments offered to employees in 2020 as a strategy to entice them back into the office. This move is aimed at bolstering recruitment and retention efforts, particularly in light of the agency’s growing staffing challenges.Also check EV Tax Credit 2023 Federal Tax Credit and How to Claim EV Tax Credit 2023?

Special Pay Incentives Are Being Considered by the IRS as a Means of Boosting Employee Motivation

Previous Incentive Payments Overview

The TIGTA report, made public on Monday, discloses that the IRS allocated over $1.5 million in recruitment, retention, or relocation incentives spanning fiscal years 2019 through 2022. These incentives were granted to 1,466 employees from various non-IT business units. Notably, a significant portion of this sum ($900,000) was disbursed during fiscal 2020, luring 1,435 employees back to the workplace.

Escalating Staffing Shortages

Presently, the IRS confronts shortages not only within its IT workforce, which has necessitated incentive pay to compete with the private sector, but also in other sectors as its staff approaches retirement age.

Strategic Hiring Goals and Challenges

One of the IRS’s key objectives is to leverage the additional funding received under the Inflation Reduction Act of the previous year to recruit 19,000 employees annually. With ongoing workforce attrition, the IRS anticipates a net growth of 5,000 to 10,000 employees each year. The agency is contending with an estimated average attrition rate of 8.5% over the next three years. In fiscal year 2023, the IRS projects a need to hire approximately 26,000 non-IT organization employees.

Special Incentives During the Pandemic

During the pandemic period, the IRS introduced a range of recruitment, retention, and relocation incentives, spanning from around $4,800 to $64,000 for recruitment, $200 to $27,000 for retention, and approximately $17,500 to $21,500 for relocation. TIGTA reviewed a sample of 17 such incentives granted to IRS employees between fiscal years 2019 and 2021, affirming their proper review, approval, and compliance with the agency’s guidelines.

Addressing Mission-Critical Shortages

TIGTA has recommended an expansion of the use of special payment incentives as a means to address the ongoing shortages of mission-critical personnel. By utilizing these incentives, the IRS aims to both hire and retain highly skilled non-IT employees. The agency acknowledges that failing to fill these vital roles could have adverse effects on its ability to fulfill tax administration duties effectively.

IRS’s Response and Future Strategy

In response to the report, Traci DiMartini, the IRS’s human capital officer, highlighted the potential to extend the utilization of special payment incentives. The IRS intends to develop workforce demand forecasts, assess the health of mission-critical roles, and formulate a strategy to employ financial incentives effectively for recruitment, relocation, and retention.

In conclusion, the IRS is considering the reinstatement of 2020’s extra payments as a strategy to attract employees back to the office, thereby addressing staffing challenges and achieving its mandated goals.