The Inflation Reduction Act’s clarion call to more than double the size of the IRS has raised hackles and ire across the board. A more domineering IRS is frightful to contemplate. My response to this is simple: Don’t worry, it won’t happen. Why? The biggest obstacle that the federal government is going to face is where they are going to get the bodies with the skills needed to fill these new positions.
Having worked for 25 years for one of the big three accounting firms, I am more than aware of the challenges the industry has in hiring qualified accounting staff. At one point my firm had set up a program at the University of Virginia to take liberal arts graduates and turn them into accountants over the course of an intense 18 month program . . . such is the difficulty of having enough staff.
All three of the big three struggle to secure accounting and financial services staff. It is a highly competitive industry because fewer college graduates are entering that field. While the pay is excellent, the hours are long and travel can be extensive, making for a burn and churn work environment over time. While the top tier schools are targeted by the big three, graduates from lower profile schools have little problem securing work. It is rare to see accountants in the ranks of the unemployed.
Candidates need to actually have accounting skills to make good agents and auditors. I spoke with my accountant this weekend and he relayed a number of stories of auditors and agents he had dealt with in the past who didn’t have the overall competency. Trust me, you need to know the law and accounting to be successful. Putting someone with a Women’s Gender Studies degree in as an auditor isn’t going to work.
The problem that the IRS is going to face is simple—where are you going to get good qualified people to be agents? Why would someone take an entry-level position working for the government when the corporate sector is hiring? The salary differences could be as large as tens of thousands of dollars; Many will simply look past the IRS as an employer of anything other than the last resort.
The IRS will be a bottom feeder for the industry, if they get that far.
The IRS could potentially try and take people with more generic non-business degrees and teach them accounting, but that has challenges. The best case scenario is 18 months of learning to get them enough background to possibly start work. During such a training program, you are paying salaries, benefits, etc., and you are getting zero productivity. Not everyone will pass such a program either—you will have drop outs and outright failures. With government oversight, it is destined to collapse in on itself.
Consider that many younger job seekers tend to be transient in their jobs. They change jobs and career directions often. How can a government agency possibly compete with the rest of the industry? In short, they can’t and won’t. So our tax dollars will be spent to give these people skills that they will simply carry with them to other, better paying jobs elsewhere.
People with business degrees may more easily convert their skills to accounting, but recruitment will be a challenge. Accounting is a specialized industry that combines law, principles, math, and more than a dollop of common sense. Even if you could shave a month or two out of the training program, it won’t be enough. You can’t throw bodies at the problem either. Outsourcing won’t work, because the companies you are outsourcing to are already going to struggle on their own with recruiting.
Like most government programs, this portion of the Inflation Reduction Act is fraught with unintended consequences. If the IRS could somehow become competitive in the market, it will put a pinch on the accounting firms and their ability to handle workloads. If the IRS finds a way to train people to be good agents/auditors, long-term retention is going to be a hurdle that few government agencies are nimble or intelligent enough to counter.
While people focus on the staggering size of potential new agents or the fact that they will be armed, the reality is that it may be impossible for them to ever fill all of these positions to begin with.