A majority of the IRS’s office buildings are running at less than 50% capacity, the tax agency’s inspector general said Monday in an audit prodding officials to speed up their consolidation plans.
The IRS has made some strides, cutting its real estate by 8% down to 22.3 million square feet over the last six years. But the agency needs to redouble its efforts, the inspector general said.
A survey last year found more than half of its 516 office buildings were running at less than 50% occupancy.
And among employees who telework, the IRS has not figured out workstation sharing for 61% of them. Putting them into a 2-to-1 workstation sharing system could eliminate the need for more than 7,000 seats and save more than $10 million a year, the Treasury Inspector General for Tax Administration said.
The capital region does the worst with sharing. The inspector general said it has just a 47% workstation occupancy rate. The Ogden, Utah, region did the best with a 67% sharing rate.
The audit said the IRS faces a challenge in matching manpower to space because it’s in the middle of a hiring spree under Democrats’ 2022 budget-climate law, which pumped tens of billions of dollars into the agency.
That hiring spree led to a decline in workstation occupancy, from 66% in 2020 down to 60% last year.
The agency also lacks a coherent plan for stacking that up against its broader telework and space plans, the inspector general said.
“Until the IRS develops and maintains an overall long-term space reduction plan that fully addresses and maximizes space savings associated with current telework policy, it will struggle to significantly reduce the amount of unneeded space that it currently occupies,” the audit found.
The report comes as federal agencies are under intense scrutiny to right-size their office needs.
On Capitol Hill, some lawmakers are pushing for a broad return to work after the pandemic while others say telework is a viable option, but they worry agencies aren’t realizing the office space savings from letting people work elsewhere.
Treasury Secretary Janet Yellen told senators last week that the IRS’s labor union is a hindrance to getting people back in the office at the 50% rate she’s asking for.
In its official response to Monday’s report, the IRS accepted the inspector general’s recommendations but defended its handling of the matter.
Richard Rodriguez, the IRS’s chief of facilities management, said they’re still trying to figure out where telework takes them.
“Right-sizing our real estate portfolio is a complex endeavor, given the significant increase in hiring related to the Inflation Reduction Act priorities and the existence of programs, including a Remote Work Pilot, that only temporarily reduces demand for workstations unless IRS and treasury leadership decide to make these programs permanent.”
He said the IRS is trying to come up with a long-term space reduction plan.
Mr. Rodriguez also disputed the inspector general’s $10 million savings for workstation cost sharing, saying that assumed the agency could dispose of the real estate.
The IRS expects to spend $600 million this year on real estate.
In 2023, the IRS had hoped to cut some 329,000 square feet. It finished 234,000 of that.
But it also added another 118,000 square feet, leaving it with a net reduction of 116,000 square feet.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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