Background The mission of IRS’s HCO includes providing “human capital strategies  and tools for recruiting, hiring, developing, retaining, and transitioning a  highly-skilled and high-performing workforce to support IRS mission  accomplishments,” and developing and implementing “technology- enabled systems and processes to improve human capital planning and  management and empower employees to achieve their potential.” HCO is headed by the Human Capital Officer who reports to the Deputy  Commissioner for Operations Support and is to “provide executive  leadership and direction in all matters relating to the Service’s employees,  overseeing the design, development, and delivery of comprehensive,  agency-wide human capital management and development programs that  contribute to the Service’s vision and mission.” Worklife Benefits and Performance (WBP) and Employment, Talent and  Security (ETS) are two subdivisions within HCO responsible for  supporting many of IRS’s strategic human capital management activities.  Among WBP’s responsibilities are: agency-wide strategic workforce planning; workforce planning consultation and support; OPM/Treasury/IRS workforce planning pilots, projects, and initiatives;  IRS workforce data reporting; analyzing workforce projections; and attrition analysis. ETS is responsible for providing policies, products, and services that  support business efforts to identify, recruit, hire, and advance a workforce  with the competencies necessary to achieve current and future  organizational performance goals. In particular, ETS “partners with  business units to develop strategic hiring plans that drive the hiring  decision by planning, executing and evaluating the type of position to be  filled based on agency-wide workforce, attrition and workload needs.” Strategic Human Capital  Management – High-Risk  Area Strategic human capital management, which includes workforce planning  activities, is a persistent challenge across the federal government. We  designated strategic human capital management across the government  as a high-risk issue in 2001 because of the federal government’s long- standing lack of a consistent strategic approach to human capital  management. In February 2011, we narrowed the focus of this high-risk  issue to the need for agencies to close skills gaps in mission-critical  occupations. Agencies can have skills gaps for different reasons: they  may have an insufficient number of employees or their employees may  not have the appropriate skills or abilities to accomplish mission-critical  work. Moreover, current budget and long-term fiscal pressures, the  changing nature of federal work, and a potential wave of employee  retirements that could produce gaps in leadership and institutional  knowledge threaten to aggravate the problems created by existing skills  gaps. Mission-critical skills gaps both within federal agencies and across  the federal workforce continue pose a high risk to the nation because they  can impede the government from cost-effectively serving the public and  achieving results. IRS Budget IRS’s budget declined by about $2.1 billion (15.7 percent) from fiscal  years 2011 through 2018 (see figure 1). The President’s fiscal year  2019 budget request was $11.135 billion. This amount is less than the  fiscal year 2000 level for IRS, after adjusting for inflation. IRS requested  an additional $397 million to cover implementation expenses for Tax Cuts  and Jobs Act over the next 2 years and received $320 million for  implementation pending submission of a spending plan, which IRS  provided in June 2018. We previously reported IRS would direct the  majority of the money toward technological updates. The Tax Cuts and Jobs Act made a number of significant changes to the  tax law affecting both individuals and corporations. For example, for  individual taxpayers, for tax years 2018 through 2025, tax rates were  lowered for nearly all income levels, personal exemptions were eliminated  while the standard deduction was increased, and certain credits, such as  the child tax credit, were expanded. To implement the changes, IRS  must (1) interpret the law; (2) create or revise hundreds of tax forms,  publications, and instructions; (3) publish guidance and additional  materials; (4) reprogram return processing systems; and (5) hire  additional staff and train its workforce to help taxpayers understand the  law. IRS’s HCO estimated that the agency would need to hire and train  new staff to fill approximately 1,100 positions requiring a variety of  competencies, and provide additional training on tax law changes for  current employees. HCO will be responsible for recruiting and hiring  new employees with the needed skills. IRS is in the Early  Stages of Defining  and Addressing its  Workforce Needs IRS Strategic Workforce  Planning Is Fragmented  and Activities to Address  Skills Needs Are Not  Routinely Performed IRS has scaled back strategic workforce planning activities in recent  years. Prior to 2011, IRS staff within its HCO or other dedicated program  office conducted and coordinated agency-wide strategic workforce  planning efforts. IRS officials told us that resource constraints and fewer  staff with strategic workforce planning skills due to attrition since 2011  required HCO to largely abandon strategic workforce planning activities.  Instead, HCO generally focused its efforts on completing HR transactions,  such as retirements and benefits processing, meeting legal compliance  activities, and facilitating hiring of seasonal employees. Since 2011, key human capital activities—such as developing an  inventory of skills, identifying skills gaps, and attrition forecasting— became increasingly fragmented and shifted to the individual business  divisions and program offices. IRS officials cited management familiarity  of programmatic needs, challenges, processes, and culture as a benefit  of workforce planning autonomy at business divisions and program  offices. However, the officials told us these activities were often  performed only to the extent those divisions had the time, resources, and  top management interest. As a result, the quality of key human capital  activities was uneven across the agency, if performed at all. In addition,  HCO officials told us the lack of an agency-wide strategy and HCO  authority to manage and coordinate strategic workforce planning efforts  put the agency at greater risk for unnecessary duplication of effort in HR activities; development of redundant and generally noninteroperable systems  used to maintain human capital information; and  failure to effectively identify and retain personnel with critical skills and  experience across the agency. IRS’s Information Technology (IT) is an example of an individual program  office that has taken steps to address skills needs. IT developed a skills  and competency inventory of its workforce. IRS officials told us  maintaining and updating the inventory has been particularly helpful to  informing IT hiring and training decisions, given the rapid nature of  change in the technology industry and competition for top talent from the  private sector. In June 2018, we found IRS had not fully implemented any  of the key IT workforce planning practices we have previously identified.  We recommended IRS should fully implement IT workforce planning  practices, including (1) setting the strategic direction for workforce  planning; (2) analyzing the workforce to identify skills gaps; (3) developing  strategies and implementing activities to address skills gaps; and (4)  monitoring and reporting on progress in addressing skills gaps. IRS  agreed with our recommendation, but stated its efforts to address these  issues were limited solely due to diversion of IT resources to  implementation of the Tax Cuts and Jobs Act. We concluded that until the  agency fully implemented these practices, it would continue to face  challenges in assessing and addressing the gaps in knowledge and skills  that are critical to the success of its key IT investments. A number of indicators led IRS to determine that continuing to make  short-term, largely nonstrategic human capital decisions was  unsustainable, according to IRS officials. For example, IRS has relatively  high rates of employees eligible to retire. Nearly half of IRS’s Senior  Executive Service (SES) is eligible to retire (see figure 2). Retirement  eligibility rates among both SES and non-SES employees is not only  greater than the rate at other federal agencies, but are also trending  higher according to our analysis of OPM data. We have previously reported that the high rate of federal employees  eligible for retirement creates both an opportunity and a challenge for  agencies. If accompanied with appropriate strategic and workforce  planning, it may create an opportunity for agencies to align their  workforce with needed skills and leadership levels to meet their existing  and evolving mission requirements. However, it means agencies will need  succession planning efforts as well as effective sources and methods for  recruiting and retaining candidates to avoid the loss of technical expertise  in mission-critical skills. IRS is trying to mitigate the loss of institutional  memory and meet its current obligations by re-employing recently retired  employees (also known as re-employed annuitants). However, according  to HCO officials, as of October 2018, the agency is struggling to bring  recently retired employees back in part because many had taken other  employment. HCO is focusing on other activities, such as contract staffing  services, to meet workload demands. As we discuss later in this report,  IRS is taking a number of actions to address staffing shortages, but the  effectiveness of those efforts are not yet known. IRS’s FEVS results also indicate the agency is at risk of losing employees  with critical skills. For example, IRS’s results for the Global Satisfaction  Index—a measure generated by OPM that combines employees’  responses about satisfaction with their job, pay, the organization, and  their willingness to recommend their organization as a good place to  work—fell below the government-wide average in 2013. Relatedly, our  analysis of fiscal year 2016 IRS exit survey results found 32 percent of  separating employees indicated poor office morale strongly influenced  their decision to leave. Though improving since 2015, IRS continued to  lag behind the government-wide average as of 2017, the most recent  year of data available at the time of this study (see figure 3). Key Initiative Delay Has  Hampered IRS’s Ability to  Fully Address Its  Workforce Needs In 2016, IRS determined the agency needed to develop a strategic  workforce plan and conduct related workforce planning activities to help  mitigate the risks associated with fragmented human capital activities as  discussed above, according to HCO officials. IRS provided authority to  HCO to be the central coordinating body to lead that effort, hereafter  referred to as the workforce planning initiative. In March 2018, IRS issued  an update to its Internal Revenue Manual stating HCO’s responsibilities.  For example, IRS provided HCO authority to:  conduct strategic workforce planning annually that is aligned with  Treasury’s mission, goals, and objectives; perform data analysis of the current and future workforce, identify  gaps, and submit solutions that will enable the organization to meet its  mission, goals, and objectives; ensure the existence and integration of human capital planning  functions into the workforce planning process, including skills  assessments, competency models, recruitment planning, training and  development, and retention and succession planning; provide guidance and direction for IRS-wide workforce planning ensure the implementation of an agency-wide skills assessment and  competency model framework; and  communicate commitment for a consistent, repeatable, and  systematic workforce planning process to enable improved and  integrated management of human capital initiatives. The IRM also describes IRS’s workforce planning process, which includes  a five-phase strategic workforce planning model that is intended to align  with OPM’s workforce planning model (see figure 4). Implementing the strategic workforce planning model and conducting  related initiative activities could help the agency ensure its human capital  programs align with its mission, goals, and objectives through analysis,  planning, investment, and measurement, as required in federal  regulation. Furthermore, we determined elements of the initiative  addressed key principles we have previously identified for effective  workforce planning. For example, the model includes steps to analyze  the workforce to determine the critical skills and competencies the agency  needs to achieve current and future programmatic results, and to monitor  and evaluate the agency’s progress toward its human capital goals. As a  result, the initiative could position IRS to systematically identify the  workforce needed for the future, develop strategies for identifying and  closing skills gaps, and shape its workforce. However, IRS’s implementation of its workforce planning initiative has  been delayed. Phase 1 (Enterprise Strategy and Planning) of the  workforce planning initiative was underway as of the first quarter of fiscal  year 2018, and IRS was scheduled to complete this phase by the second  quarter of fiscal year 2018. IRS reports show the agency originally  anticipated completing all five phases by June 2018. According to IRS  officials, however, IRS now anticipates Phase 1 activities to resume after  the opening of the 2020 tax filing season and, as of November 2018,  could not estimate a completion date for any of the five phases. The workforce planning initiative has been delayed for three primary  reasons, according to IRS documents and officials:  1.  Redirection of resources to Tax Cuts and Jobs Act  implementation. IRS granted extensions at the request of business  divisions and commissioner-level organizations that needed to  redirect resources to support the implementation of Tax Cuts and  Jobs Act. To implement the 119 provisions of the Tax Cuts and Jobs  Act, we reported that IRS would need to (1) interpret the law; (2)  create or revise nearly 500 tax forms, publications, and instructions;  (3) publish guidance and additional materials; (4) reprogram 140  interrelated return processing systems; (5) hire additional staff and  train its workforce to help taxpayers understand the law and how it  applies to them; and (6) conduct extensive taxpayer outreach. In  addition to redirecting staff, IRS has used overtime and compensatory  hours to complete necessary activities in time for the 2019 filing  season.  2.  Lack of workforce planning skills. As part of a Treasury pilot, IRS  conducted a self-assessment of key competencies within HCO as well  as within business division-based HR offices. The assessment found  competency around workforce planning was among the lowest ranked  skills within HCO. According to HCO officials, IRS lacks training and  resources available to help its human capital staff develop  competency in workforce planning. HCO officials told us they plan to  leverage IRS’s Workforce Planning Council to develop strategic  workforce planning skills. HCO officials told us the council has  training designed to help the HR staff understand how to gather data,  use technology, and perform other activities that contribute to IRS’s  strategic workforce planning efforts. In addition to a lack of strategic  workforce planning skills, a number of key HCO personnel with  strategic workforce planning expertise have recently separated from  IRS, according to HCO officials.  3.  Information system deployment delay. Treasury is developing the  Integrated Talent Management system (ITM). Treasury intends ITM to  provide the agency with greater visibility of its total workforce, and  help its bureaus, including IRS, with workforce planning activities such  as succession planning and competency management. Treasury  officials told us as of November 2018, ITM is still in development and  its deployment has been delayed for a number of reasons, including  the need for Treasury to complete system implementation plans and  user guides, and address system administration issues at the  bureaus. IRS HCO officials told us they opted to wait on ITM rather than  moving forward with a number of Phase 2 (Workforce Analysis)  activities. IRS HCO officials said they needed this, or a similar  software tool, to ensure reliable data capture, make analysis more  efficient, and help managers conduct routine updates of workforce  planning efforts rather than static, one-time data calls. HCO also  opted to wait for ITM to avoid potentially redundant reprogramming of  existing systems. However, HCO officials noted that even when ITM is  eventually deployed, IRS would need to train business divisions on its  use, further lengthening the time needed before conducting Phase 2  activities. Treasury officials told us that ITM would complement rather  than replace existing systems and processes. Our analysis of Treasury documents and interviews with Treasury and  IRS HCO officials found it was unclear when an ITM module related to  talent management and strategic workforce planning will be deployed  and available for IRS’s use, the functions it will include, and how IRS’s  existing systems and processes would be affected. As a result, IRS  lacks the information needed to make staffing and technology  decisions related to the workforce planning initiative, putting the  initiative at risk of further delay. IRS Could Improve  Reporting on the Status of  its Workforce Planning  Initiative Treasury is required to conduct data-driven reviews via HRstat. HRStat  is a strategic human capital performance evaluation process that  identifies, measures, and analyzes human capital data to inform the  impact of an agency’s human capital management on organizational  results with the intent to improve human capital outcomes. HRstat is also  a proven leadership strategy that can help agency officials monitor their  progress towards addressing important human capital efforts, such as  closing skills gaps. Treasury uses HRstat to monitor the progress of its bureaus in meeting  their human capital goals, including IRS’s implementation of the  workforce planning initiative. In preparation for the data-driven reviews,  each bureau, including IRS, submits HRStat information to Treasury.  Treasury and bureau officials discuss the results and make related  strategic decisions during bi-monthly Human Capital Advisory Council  meetings. Our review of IRS HRstat reports, however, found additional  information is needed to more fully reflect the status of the workforce  planning initiative and related challenges. For example:  in the January, March, May and July 2018 HRstat submissions, IRS 1)  reported a status of green (on schedule) for “Increased efforts for  development of long-term IRS workforce staffing plan”, and 2)  indicated under Key Issues/Challenges that completing the initiative  was dependent on ITM deployment;  in the July 2018 HRstat submission, IRS moved several milestones to  future fiscal years, and identified ITM delays as a significant risk to the  workforce planning initiative schedule;  in the September 2018 HRstat submission, IRS reported the status of  the workforce planning initiative was no longer on schedule. The  report identified ITM delays as the cause, but did not include other  reasons for the delay, specifically the redirection of resources to Tax  Cuts and Jobs Act implementation and a lack of strategic workforce  planning skills within HCO. Federal strategic human capital standards state agencies are to  communicate in an open and transparent manner to facilitate cross- agency collaboration to achieve mission objectives. In addition, agency  leaders should hold managers accountable for knowing the progress  being made in achieving goals and, if progress is insufficient, understand  why and having a plan for improvement. More complete HRStat  information could help IRS and Treasury take fuller advantage of a key  opportunity to discuss and address workforce planning initiative delays at  Human Capital Advisory Council meetings. IRS is Not Fully  Addressing Skills  Gaps in Its Workforce Strict Hiring Limits  Contributed to Annual  Declines in IRS Full-Time  Equivalents Since 2011 IRS full-time equivalents (FTE) have declined each year since 2011, and  declines have been uneven across different mission areas (see figure 5).  From fiscal years 2011 through 2017, IRS FTEs declined from 95,501 to  an estimated 77,685, an 18.7 percent reduction. Our analysis of the  President’s Budget data produced by OMB found the reductions have  been most significant within IRS Enforcement, where staffing declined by  27 percent (fiscal years 2011 through 2017). In comparison, staff  supporting Taxpayer Service activities declined by 8.2 percent, while staff  within Operations Support declined by 12.7 percent (fiscal years 2011  through 2017.) IRS estimated FTEs would continue to decline across the  three areas in fiscal year 2018. IRS attributed staffing declines primarily to a policy decision to strictly limit  hiring. According to IRS, declining budgets over multiple years  necessitated decisions for how to reduce and control labor and labor- related costs, which accounted for around 74 percent of its budget  allocations in fiscal year 2017. One way IRS sought to control costs was  its decision to implement the Exception Hiring Process beginning in fiscal  year 2011. The process effectively froze replacement of employees lost to  attrition in most program areas, placed limits on external (nonseasonal)  hiring, added additional approval steps for new hires, and placed priority  on acquiring information technology and cybersecurity staff, according to  IRS officials. The Exception Hiring Process remains in place, but as we  discuss later, has evolved over time because IRS has received  supplemental funding and other priority areas have emerged. IRS also  limited overtime and training as a means of controlling costs. Declining Staffing  Contributed to IRS  Decisions to Scale Back  Enforcement Activities Available staff was a key factor in decisions to scale back a number of  program activities, most predominantly in enforcement, according to IRS  officials. IRS officials told us that, unlike other areas where the agency is  legally required to perform certain functions, the agency has flexibility to  curtail many enforcement activities when attrition rates increase. Auditing  tax returns, for example, is a critical part of IRS’s strategy to ensure tax  compliance and address the tax gap, or the difference between taxes  owed and those paid on time. Our analysis of IRS data shows the number  of individual returns audited has declined each year between fiscal years  2011 through 2017, a 40 percent decline (see figure 6). Reduced audit rates were not limited to individual returns. IRS data show  that audit rates of large corporations with assets $10 million or greater  declined from 17.7 percent in fiscal year 2011 to 7.9 percent in fiscal year  2017. We have previously reported on other areas in which staffing declines  affected IRS operations, including fewer nonfiler investigations, private  letter rulings, elimination of a bankruptcy program, and increases in the  time needed to close innocent spouse appeals. In addition, we have  made recommendations to IRS to better target its limited enforcement  resources so it can, for example, 1) maximize revenue yield of the income  tax, and 2) more effectively audit large partnerships. IRS agreed with the  recommendations and took some action to close them. As of October and  July 2018, respectively, those recommendations have not been fully  addressed. IRS Has Skills Gaps in  Key Occupations As previously discussed, IRS is in the initial stages of implementing a  strategic workforce planning model, which could provide IRS with  information needed to understand what critical skills and competencies  are needed to meet its mission. However, according to IRS officials, the  agency has not used such a framework in recent years, making it difficult  to determine where skills gaps exist. Nonetheless, our analysis of Treasury documents, Enterprise Human  Resources Integration data, and interviews with agency officials found  IRS currently has skills gaps in key occupations. In fiscal year 2017,  Treasury conducted a department-wide analysis of mission critical  occupations (MCO) at risk of skills gaps. Treasury analyzed four factors  to determine and rank MCOs at highest risk for skills gaps: 1) 2-year  retention rate, 2) quit rate, 3) retirement rate, and 4) applicant quality.  Analysis of these factors can help build the predictive capacity of  agencies to identify mission critical skills gaps as they emerge. The  following are the MCOs relevant to IRS that Treasury determined to be at  medium or moderate risk for skills gaps, in order of risk: human resources specialist,  tax law specialist. In light of staff attrition since 2011, particularly within enforcement  occupations, we selected tax examiners and revenue officers to  demonstrate how IRS has implemented strategies, policies, and  processes for identifying and addressing skills gaps, and to identify critical  instances where those efforts have affected IRS’s ability to identify and  close critical skills gaps. Tax Examiners Tax examiners are responsible for responding to taxpayer’s inquiries  regarding preparation of a variety of tax returns, related schedules and  other documentation; resolving account inquiries; advising taxpayers of  enforcement actions; and managing sensitive case problems designated  as requiring special case handling. In addition, tax examiners analyze and  resolve tax-processing problems; adjust taxpayer accounts; prepare and  issue manual refunds; and compute tax, penalty, and interest. IRS documents note that the level of supervision, complexity, contacts,  and the scope of assigned workload varies for tax examiners across  performance levels. At the entry level, tax examiners are responsible for  receiving and initiating contacts with taxpayers to gather information and  resolve issues, and to gain compliance with laws and regulations while  dealing with taxpayers that may be evasive under sensitive situations. At  the intermediate level, tax examiners are responsible for handling a wide  variety of the most difficult or sensitive tax processing problems. Their  work products affect the taxpayer’s filing status and tax liability for current,  prior, and future reporting requirements. At the senior—or expert—level,  tax examiners serve as a work leader over employees engaged in  accomplishing tax examining work, as well as perform a full range of  examination duties that include adjusting tax, penalty, and interest on  taxpayers’ accounts and closing cases. Our analysis of OPM data found that, from fiscal years 2011 through  2017, the agency lost 18 percent of its total tax examiner workforce (see  figure 7). Additionally, the number of tax examiners in the intermediate  level declined by 34 percent during that same period. IRS officials told us  replacing tax examiners is particularly difficult not only because of the  general hiring restrictions affecting the entire IRS, but also because of the  significant amount of specialized expertise that must be developed to  perform in a specific area of tax law. According to IRS officials, in 2018 and in response to declining tax  examiner personnel, IRS doubled the dollar amount thresholds tax  examiners use to select refunds for additional audit. IRS officials told us  this means thousands of refunds that would have received additional  scrutiny due to errors or anomalies are no longer considered for follow-up  review by tax examiners, and the government is potentially missing  significant opportunities to collect revenue and enforce tax laws. Three of the four business divisions within IRS identified skill gaps among  its tax examiners. Large Business and International (LB&I). According to LB&I  officials, long-term vulnerability with their tax examiners is a major  concern, in part because LB&I has been unable to replenish its tax  examiner workforce given external hiring constraints and internal  promotion concerns (i.e., internal promotions can leave staffing gaps  at the lower ranks putting them at risk for skills gaps). According to  LB&I officials, having fewer tax examiners—specifically fewer tax  examiners in key geographic locations—is affecting its mission. For  example, LB&I reviews tax returns of foreign nationals and overseas  taxpayers, which are predominantly paper-based returns and have to  be processed manually. LB&I officials told us manual paper return  processing is time intensive and, with fewer tax examiners, puts IRS  at greater risk of having to pay interest to taxpayers for withholding  refunds due to processing delays. Small Business/Self-Employed (SB/SE). According to SB/SE  officials, gaps among tax examiners are evident and, as a result,  SB/SE has reduced work plans and increased the use of overtime.  Within SB/SE’s Campus Exam/Automated Underreporter program,  officials identified staffing gaps that they attributed to the general  inability to hire behind attrition. According to SB/SE officials, as  managers and lead vacancies arise, tax examiners are often detailed  to fill the positions, which reduce the number of tax examiners  available to perform the work. Wage and Investment (W&I). According to W&I officials, they have  identified tax examiner skills gaps within their Accounts Management,  Submission Processing, and Return Integrity and Compliance  Services programs. To address identified skills gaps within W&I,  officials said they conduct annual Strategic Hiring Summits bringing  together stakeholders and business partners to jointly address filing  season staffing needs, staffing barriers and gaps, and hiring lessons  learned from prior filing seasons. According to W&I officials, these  efforts continue to improve their targeted hiring and timeliness of its  onboarding efforts. Other strategies that W&I plans to implement are  to bring in tax examiners earlier and provide them with the full  spectrum of training upfront rather than spreading the training out over  months or years. Additionally, they said tax examiners are going to be  cross trained on multiple types of inventory to increase their skills and  to address inventory backlogs. Revenue Officers Revenue officers are IRS civil enforcement employees who are trained to  conduct face-to-face contact with business and individual taxpayers who  have not resolved their tax obligations in response to prior  correspondence or contact. The role of revenue officers involves  explaining to taxpayers why they are not in compliance, advising them of  their financial obligation, and when necessary, taking appropriate  enforcement action. According to IRS, the goal is voluntary taxpayer  compliance through payment arrangements or compromises. However,  for taxpayers that remain noncompliant, revenue officers are trained to  take civil enforcement actions, such as filing a notice of lien to protect the  government’s interest, including and up to seizing personal and business  property. According to IRS officials, it takes 4 to 5 years to train a new hire to  become an experienced senior or expert revenue officer. The senior or  expert levels are of particular importance to IRS’s enforcement efforts. An  internal IRS study completed in June 2018 found that 84 percent of all  successful fraud referrals came from revenue officers at the senior/expert  skill level. Senior revenue officers also serve as classroom instructors and  perform on-the-job training of intermediate and entry-level staff. According  to IRS officials, this additional responsibility directly affects senior revenue  officers’ ability to work fraud cases. Our analysis of OPM data shows that the total number of revenue officers  at IRS declined by nearly 40 percent from fiscal years 2011 through 2017,  and entry-level revenue officers declined by 86 percent during that same  period (see figure 8). IRS officials told us the declines were due to a  combination of attrition, limited hiring, and promotions. IRS decided to scale back nonfiler investigations in light of declining  staffing, according to IRS officials. We reported in tax year 2010 that IRS  started 3.5 million individual nonfiler cases and 4.3 million business  nonfiler cases. In tax year 2014, nonfiler cases dropped to 2 million for  individuals and 1.8 million for businesses, a reduction of 43 percent and  58 percent, respectively. More recently in fiscal year 2018, IRS data  show nonfiler investigations declined to 0.8 million for individuals and 0.4  million for businesses. IRS Collaborated with  OPM and Treasury to  Address Skills Gaps  among Revenue Agents Since we designated addressing agencies’ mission critical occupation  skills gaps as a high-risk area in 2011, OPM and agencies have launched  a number of initiatives to close skills gaps. For example, in 2011, OPM  and the Chief Human Capital Officer Council established an interagency  working group to identify mission critical occupations (MCO) at high risk  for skills gaps. The working group, also known as the Federal Agency  Skills Team (FAST), identified skills gaps in six government-wide  occupations, such as cybersecurity, human resources (HR) specialists,  and acquisition. The FAST also identified agency-specific MCOs at high  risk for skills gaps, which included IRS revenue agents. Subsequently,  Treasury was designated leader of a FAST subteam to develop a plan for  closing skills gaps among revenue agents. Treasury convened a group of  revenue agents from each of IRS’s business divisions, IRS human  resource specialists with workforce planning expertise, and members of  IRS’s training group. Table 1 shows the process the subteam used to  identify and address the causes of revenue agent skills gaps. The FAST brainstormed potential causes for skills gaps among revenue  agents (see figure 9). According to FAST documents, this process helped  the team understand the range of contributing factors that led to lower  than acceptable 2-year retention rates and a high quit rate among  revenue agents. Now that FAST identified the potential causes for the two indicators,  Treasury officials told us IRS is responsible for developing and  implementing strategies to close skills gaps among its revenue agents  and reporting on its progress. According to IRS documents, as of July  2018, the agency established communications with revenue agents to  increase awareness about detail and developmental opportunities that  are posted on IRS’s Service-wide Detail Opportunities web page, and is  developing a plan for more effectively including revenue agents in  management training. Related IRS performance measures show that  posted detail opportunities for revenue agents have increased from 24 in  fiscal year 2016 to 69 in fiscal year 2018. IRS’s HCO Provides  Services to Help Address  Skills Gaps, but Does Not  Have the Capacity to Fully  Meet Needs For a limited number of mission critical occupations, HCO provides  support to business divisions and program offices that need help  addressing workforce capacity concerns. For example, HCO conducts  competency assessments when a business division or program is  seeking to identify the top candidates for hire or promotion. Determining  critical competencies can help agencies effectively meet demographic,  technological, and other forces that are challenging government agencies  to change activities they perform and the goals that they must achieve,  how they do their business, and even who does the government’s  business. HCO also conducts skills assessments when a division or  program office needs to determine the skill level of their existing  employees for the purposes of training, hiring, retention, or staffing  decisions. Agencies can use both competency and skills assessments to  help identify and address skills gaps. For competency assessments, HCO officials told us they develop annual  work plans that prioritize assessment scheduling for certain occupations  based on factors including available funding, business division, or  program office staff availability to assist HCO with subject matter  expertise, and the age of the competency model or assessment. For  example, in 2017, HCO supported a competency assessment for special  agents within its Criminal Investigations (CI) division. CI special agents  are forensic accountants searching for evidence of criminal conduct. HCO  officials told us competency assessments for special agents are a priority  due to rapidly evolving sophistication of schemes to defraud the  government and increasing use of automated financial records. IRS used  information resulting from the competency assessment to revamp the  special agent hiring process. According to HCO officials, results from the  competency assessment have helped IRS reduce the cost and time to  assess applicants while improving the overall candidate pool. Skills assessments supported by HCO have been used in some limited  cases to help IRS identify and address skills gaps among certain MCOs.  According to HCO officials, they provide skills assessments upon request  by a business division and program office, assuming personnel and  funding resources are available. IRS business divisions or program  offices cover costs associated with large-scale assessments where  contractor support is needed to supplement HCO’s staff. Skills  assessments among occupations with smaller populations usually do not  incur costs to the divisions. HCO has supported requested skills  assessments of information technology specialists, revenue agents, and  human resources specialists in recent years. IRS documents show these  assessments were used in part to identify and address skills gaps within  these occupations. Unlike competency assessments, however, IRS does not create a work  plan or otherwise prioritize skills assessments to address those  occupations most in need. As discussed above, Treasury has identified  MCOs at moderate to high risk for skills gaps, yet skills assessments  have not addressed all the occupations identified as highest risk. Leading  practices in strategic workforce management state that agencies should  determine the critical skills and competencies its workforce needs to  achieve current and future agency goals and missions, and identify gaps,  including those that training and development strategies can help  address. A work plan for addressing skills gaps could help IRS  remediate gaps on a timely basis. Without a plan, IRS risks having to  continue scaling back mission-critical activities as it has done in recent  years. IRS Faces  Challenges in Its  Ability to Hire Key  Employees HCO Has Limited Staffing  Capacity to Hire New  Employees As previously discussed, Treasury found IRS is at risk of skills gaps  among its mission critical occupations, including its HR specialists. In light  of related agency-wide hiring limits, IRS offered early retirement  incentives for eligible hiring specialists and did not backfill other  specialists when they left the agency. HCO has lost more than half of its  hiring specialists since 2011. According to HCO, the hiring skills of  remaining specialists atrophied as those specialists were redirected to  other priority HR areas. Many of HCO’s hiring and other HR responsibilities, however, have  remained constant or increased. For example, in fiscal year 2017, IRS  hired around 6,700 seasonal employees to assist with the filing season  and HCO expects that number to increase in future fiscal years. HCO  officials told us the pace of internal hiring (i.e., promotions) remained  constant over the past several years. IRS has recently prioritized hiring to  address information technology and cybersecurity areas, as well as  implementation of the Tax Cuts and Jobs Act. As a result of the  combination of fewer hiring specialists and new hiring requirements, HCO  officials said its capacity to hire and carry out other important human  capital and HR functions is highly strained. In 2018, HCO identified improving hiring capacity as its top priority and is  exploring a variety of options, including: HCO surge contracting: Contractors will be used in locations across  the employment offices to assist with hiring and personnel security. Leverage Administrative Resource Center (ARC) services. ARC is  part of Treasury and provides administrative services, including HR  support for various federal agencies. HCO engaged ARC in May 2018  to assist with developing hiring qualifications. OPM shared services. IRS is exploring use of OPM shared services  for help in the hiring process. Business-based HR teams: Teams within the divisions have been  given authority to post internal merit promotion supervisory vacancy  announcements, which will reduce HCO’s workload for this function. HCO will retain responsibility for building positions, setting pay, and  processing personnel actions, and will provide a dedicated point of  contact for questions and quality review. Federal Executive Board team: A group of Interagency Agreement  detailees supported by Wage and Investment (W&I) to work W&I  vacancy announcement backlogs. IRS officials told us that, as of  November 2018, this option had not been successful. HCO interagency detail opportunity: Employees detailed from other  federal agencies into HR positions throughout HCO using interagency  agreements. HCO officials told us they are generally monitoring the status of these  activities, but cited competing priorities as a reason they have not  determined how each activity will be evaluated in achieving increased  hiring capacity and associated outcomes. Periodic measurement of an  agency’s progress toward human capital goals and the extent that human  capital activities contributed to achieving programmatic goals provides  information for effective oversight by identifying performance shortfalls  and appropriate corrective actions. Without a means for gauging the  relative success of its capacity-building activities, IRS risks spending its  limited HCO resources on activities that may not help the agency meet its  desired hiring outcomes. IRS Has Identified Hiring  Risks Related to Tax Cuts  and Jobs Act  Implementation IRS established a risk register as part of efforts to identify, prioritize, and  mitigate risks to IRS’s implementation of the Tax Cuts and Jobs Act,  including a number of risks related to its ability to hire. A risk register is  used to identify the source of risks, owners to manage the treatment of  those risks, and track the success of risk mitigation strategies over time.  Risk registers or other comprehensive risk reports are an essential  element of a successful enterprise risk management program. The risk register shows that a lack of strategic workforce planning in  recent years is contributing to a number of risks IRS has faced in  implementing the Tax Cuts and Jobs Act. For example: Large Business and International (LB&I) is having difficulty hiring  senior advisors needed to develop training and compliance strategies.  The risk register indicates mitigation efforts in this area, such as  extending detail opportunities, have failed and there are potential  major impacts to the program. According to LB&I officials, staffing  declines in related skills prior to the Tax Cuts and Jobs Act have  exacerbated difficulties in this area. Business units have been unable to identify critical hiring needs for  the Tax Cuts and Jobs Act. As of October 2018, HCO is coordinating  with business units to help determine hiring needs so that it can  prioritize agency hiring efforts. In a related risk, IRS determined the lack of personnel and resources  within W&I may hinder its ability to identify hiring needs for the fiscal  year 2019 filing season. According to IRS, “the  filing season  may be impacted by significant resource constraints largely due to  onboarding concerns, resulting in lost revenue, increased cost, and  significant reputational impact to the IRS.” As of October 2018, IRS  stated it has completed necessary hiring plans and determined this  risk has minimal to no impact to IRS’s ability to carry out the upcoming  filing season. Table 2 shows additional examples of risks related to hiring identified by  IRS, steps the agency is taking to mitigate those risks, and the status as  of October 2018. In September 2018, the Treasury Inspector General for Tax  Administration (TIGTA) reviewed IRS’s information technology readiness  for implementing Tax Cuts and Jobs Act. TIGTA reported IRS used  standard position descriptions for hiring efforts and had not defined  specific knowledge, skills, abilities, and other requirements necessary for  positions it expects to hire for Tax Cuts and Jobs Act implementation,  and/or back-filling existing positions due to personnel performing related  activities. We did not review position descriptions for the purposes of this  report. However, as previously discussed, without information about what  skills and skills gaps exist across the agency, IRS lacks important  information needed to inform hiring and training resource decisions. Changes to IRS’s Hiring  Process Have Contributed  to Hiring Delays It can take a year or longer from the time when a supervisor notifies his or  her division of a staffing need to the time the employee is on board,  according to IRS documents and our interviews. HCO officials attributed  much of this time to gathering required information and approvals  associated with IRS’s “Exception Hiring Process.” In fiscal year 2011, IRS instituted the process in part to help the agency  prioritize hiring decisions in a highly constrained budget environment. The  Exception Hiring Process added approval layers to IRS’s regular hiring  requirements, including direct approval from the Deputy Commissioner for  Operations Support, the Deputy Commissioner for Services and  Enforcement, or the Chief of Staff for direct reports to the Commissioner.  Also as part of this process, the Chief Financial Officer performs a cost  assessment to determine the affordability of any requested new hire, and  HCO determines if multiple hiring requests can be consolidated into a  smaller number of positions. Our review of IRS budget operating guidance and interviews found  Exception Hiring Process requirements have changed over time. Initially  in 2011, every new hire was subject to the Exception Hiring Process.  Since 2011, hiring requirements have eased in some circumstances. For  example, in 2014, business division directors were given authority to  approve internal hires (i.e., promotions) within their own business division.  More recently, new hires in cybersecurity, information technology, or  those needed to implement the Tax Cuts and Jobs Act were not subject  to the same requirements as hiring requests in other occupations. According to HCO officials, easing hiring requirements in certain  circumstances was necessary to help the agency bring on critical hires  more quickly. However, based on their interactions with managers in the  business divisions, HCO officials said the evolving and nonuniform  Exception Hiring Process requirements has been confusing to managers  requesting new hires. Business divisions and program offices often  submitted hiring requests without required information or approvals. This  has resulted in hiring delays, according to HCO officials. HCO officials  told us that issuing clearer guidance to business managers would help  ensure business divisions submit hiring requests that are complete, which  would reduce the risk of hiring delays. Conclusions In light of declining resources and increasing requirements, IRS is taking  the initial steps to reinstate a strategic approach to workforce planning  that the agency scaled back in recent years. IRS has recently provided its  HCO with authority to lead and coordinate agency-wide strategic  workforce planning efforts. However, full implementation of an IRS  initiative to conduct agency-wide strategic workforce planning has been  put on hold as other activities have taken priority, and a key workforce  planning system being developed by Treasury has been delayed. As a  result, these efforts remain fragmented, and IRS lacks an inventory of its  current workforce, has neither developed the competency and staffing  requirements nor conducted agency-wide activities associated with  analyzing the workforce to identify skills gaps, or developed strategies to  address skills gaps. Additionally, IRS could improve reporting of its  progress in addressing skills gaps. This critical information will help  provide assurance that its fragmented human capital activities are well  managed or that resources are being effectively allocated. High attrition among IRS employees, particularly in complex enforcement  occupations and lower-than-average employee satisfaction rates, puts  IRS at continued risk of skills gaps. These skills gaps have already been  a significant contributor to IRS’s decisions to scale back important  enforcement activities that are critical to promoting voluntary compliance  and closing the tax gap. However, IRS has not targeted its limited  resources to addressing issues among the mission critical occupations  most at risk of skills gaps. Instead, activities such as skills gaps  assessments are only conducted to the extent business divisions and  program offices make resources available, and management is aware of  and inclined to seek assistance from IRS’s HCO. Reporting on the results  of efforts to close skills gap and developing a work plan or other  mechanism for prioritizing assessments would better position IRS to  address key gaps. Additionally, the results of an interagency working  group effort intended to address skill gaps among IRS revenue agents  and other occupations with skills gaps across the government may hold  important lessons for addressing skills gaps among mission critical  occupations at IRS. Each of these issues is exacerbated by limited capacity within HCO,  which has redirected its resources to implementing the Tax Cuts and  Jobs Act and meeting other routine transactional human resource  requirements. HCO is leveraging a range of activities intended to help the  agency meet immediate hiring needs. Measuring the extent to which each  of activities is effective would help HCO target resources to the most  effective activities as it seeks to improve its capacity for hiring employees  in hard to fill positions in the future. In addition, issuing clear guidance on  hiring request requirements would better position IRS to avoid hiring  delays for mission-critical occupations. Recommendations for  Executive Action We are making seven recommendations, six to IRS and one to Treasury.  Specifically:  The Commissioner of the IRS should fully implement the workforce  planning initiative, including taking the following actions: (1) conducting  enterprise strategy and planning, (2) conducting workforce analysis, (3)  creating a workforce plan, (4) implementing the workforce plan, and (5)  monitoring and evaluating the results. (Recommendation 1) The Secretary of the Treasury should issue clarifying guidance to IRS  about the Integrated Talent Management system, including when the  workforce planning and talent management modules will be deployed and  available for IRS’s use, the functions it will include, and how IRS’s  existing systems and processes within business divisions and program  offices will be affected. (Recommendation 2) The Commissioner of IRS should ensure the Human Capital Officer  improves reporting for its workforce planning initiative in its bi-monthly  HRstat information submissions to Treasury. The submissions should  include the original implementation schedule, changes to the original  schedule, delays in implementation and each of their causes, and IRS’s  strategy to address the causes of those delays. (Recommendation 3) The Commissioner of IRS should ensure the Human Capital Officer and  Deputy Commissioner for Services and Enforcement report the results of  efforts to close skills gaps among revenue agents, including lessons  learned, that may help inform strategies for conducting skills gap  assessment efforts for other mission critical occupations.  (Recommendation 4) The Commissioner of IRS should ensure the Human Capital Officer and  Deputy Commissioner for Services and Enforcement collaborate to  develop a work plan or other mechanism that prioritizes and schedules  skills assessments for mission critical occupations at highest risk of skills  gaps, such as those identified by Treasury or where key activities have  been scaled back, for the purposes of developing a strategy to close the  gaps. (Recommendation 5) The Commissioner of IRS should direct the Human Capital Officer to  measure the extent to which each of its activities for improving hiring  capacity are effective in producing desired hiring capacity outcomes,  including strategies used to mitigate hiring risks associated with Tax Cuts  and Jobs Act implementation hiring. (Recommendation 6) The Commissioner of IRS should direct the Human Capital Officer and  Chief Financial Officer to issue clarifying guidance on the current  Exception Hiring Process, including clarifying areas where hiring  limitations that were used in previous years are no longer applicable.  (Recommendation 7) Agency Comments  and Our Evaluation We provided a draft of this report to the Commissioner of the Internal  Revenue Service, the Secretary of the Treasury, and the Acting Director  of the Office of Personnel Management for review and comment. In a  letter from IRS’s Deputy Commissioner for Operations Support,  reproduced in appendix II, IRS agreed with our six recommendations  directed to it. The letter states there is room for improvement in  implementing its strategic workforce plan and the associated workforce  planning initiative, and IRS will provide a detailed corrective action plan in  their 180-day response to Congress. IRS also provided technical  comments, which we incorporated as appropriate. For Treasury, the Acting Director, Human Capital Strategic Management,  the Office of the Deputy Assistant Secretary for Human Resources and  Chief Human Capital Officer, emailed comments stating Treasury agreed  with the one recommendation directed to it. In the comments, Treasury  wrote, “the [Deputy Assistant Secretary for Human Resources and Chief  Human Capital Officer] will continue to provide guidance, policy and  direction on how the ITM is used to meet Workforce Planning objectives.”  Treasury provided technical comments on the recommendation directed  to it, and we revised the recommendation as appropriate to recognize that  bureaus, not Treasury, implement the ITM. OPM did not have comments. We are sending copies of this report to interested congressional  committees, the Commissioner of IRS, the Secretary of the Treasury, and  other interested parties. This report will also be available at no charge on  our website at http://www.gao.gov. If you or your staff have any questions about this report, please contact  me at (202) 512- 9110 or McTigueJ@gao.gov. Contact points for our  offices of Congressional Relations and Public Affairs are on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix III. Appendix I: Objectives, Scope, and  Methodology You asked us to review the Internal Revenue Service’s (IRS) enterprise- wide strategic workforce planning efforts. In this report, we assess (1)  how IRS defines its workforce needs and develops strategies for shaping  its workforce; (2) the extent to which IRS identified the critical skills and  competencies it will require to meet its goals, and describe its strategy to  address skills gaps in its workforce; and (3) the extent to which IRS’s  Human Capital Office has the capacity to hire employees in hard to fill  positions. For our first objective, to determine how IRS defines its workforce needs,  we conducted a review of IRS’s implementation of its strategic workforce  planning process. We compared IRS’s strategic workforce planning  guidance, policies, and procedures, as well as the Department of the  Treasury’s (Treasury) guidance and policies to (1) Office of Personnel  Management (OPM) regulations and guidance on strategic workforce  planning, (2) our reports on key principles for effective strategic workforce  planning, and (3) standards for internal controls. To describe how IRS  workforce planning process aligns with standards, we reviewed IRS’s  documentation of its programs, policies, and practices for recruiting,  developing, and retaining the staff needed to achieve program goals. We  compared that information with requirements articulated in OPM  regulations and best practices we has identified. To include prior actions  and concerns previously identified as related to IRS’s strategic human  capital planning, we reviewed our prior relevant reports and those from  the Treasury Inspector General for Tax Administration. We also used several databases to examine IRS’s workforce trends. To  analyze trends in IRS’s full-time equivalent employment, we used the  Office of Management and Budget’s (OMB) budget database, MAX  Information System (MAX), for fiscal years 2011 through 2017. To  analyze employee engagement and employee global satisfaction at IRS,  we analyzed IRS results from OPM’s fiscal years 2011 through 2017 Federal Employee Viewpoint Survey (FEVS). To determine retirement  eligibility of SES and non-SES IRS staff, we analyzed data in OPM’s  Enterprise Human Resources Integration (EHRI) database. To assess  the reliability of EHRI, OMB Max, and FEVS data, we reviewed our past  data reliability assessments and conducted electronic testing to evaluate  the accuracy and completeness of the data used in our analyses. For  EHRI and FEVS, we also interviewed knowledgeable agency officials. We  determined the data used from these three systems to be sufficiently  reliable for our purposes. We supplemented our review of documentation by interviewing relevant  IRS, Treasury, and OPM officials. We interviewed IRS officials from the  Human Capital Office including the Human Capital Officer, Large  Business & International (LB&I), Small Business Self Employed (SB/SE),  Tax Exempt and Government Entities (TE/GE), and Wage & Investment  (W&I) business divisions to understand how IRS assesses its workforce  needs and develops strategies for shaping its workforce. We interviewed  OPM officials about regulatory requirements and their perspective on  strategic human capital planning requirements, as well as their  experience working with Treasury and IRS. We met with Treasury and  Taxpayer Advocate Service officials to understand their role and  responsibilities for coordinating with and providing oversight of IRS  activities. We reviewed IRS’s practices and related documentation for  monitoring and evaluating progress toward human capital goals, including  Treasury’s HRStat reports. For objective 2, to assess the extent IRS identified and described critical  skills required to meet its goals, in addition to activities performed to  address objective 1, we selected a nongeneralizable sample of  occupations identified by IRS as mission critical to illustrate how IRS has  implemented strategies, policies, and processes for identifying and  addressing skills gaps, and to identify critical instances where those  efforts have affected IRS’s ability to identify and close critical skills gaps.  Because IRS’s workforce planning efforts are generally conducted by  mission critical occupations (MCO), we selected MCOs as our unit of  analysis. We excluded MCOs with characteristics that made them unlikely  to yield new or useful information for the purposes of our report. MCOs  were excluded from our analysis if they (1) were under review as part of  our recent or ongoing work, (2) had small numbers of staff (less than  100), or (3) were assessed by Treasury to be at low risk for skills gaps.  The Treasury assessment ranked MCOs in order of risk for skills gaps  based on 2-year retention rate, applicant quality. Based on these criteria, we selected revenue officers and tax examiners  as occupational case illustrations representing tax enforcement activities.  These two occupations, in tandem with discussion of Treasury’s efforts to  close skills gaps among revenue agents, while not generalizable,  provided illustrative examples for this objective. We analyzed IRS’s audit  rate of individual and corporate returns to show a change in the number  of audits for fiscal years 2011 through 2017 based on data reported by  IRS in its annual Data Book. To obtain information to illustrate the current state of the selected MCOs  located within the four business divisions, we sent the business divisions  a semistructured set of written questions coupled with a request to  provide corroborating documents to support their responses. We asked  each business division for information about related MCOs, including: hiring data and retirement eligibility rates for MCOs;  skills, competency, or staffing gaps identified among its MCOs; and any resource tradeoff decisions made as a result of skills gaps. To supplement the information we gathered from responses to our written  question responses, we also reviewed IRS and Treasury documents for  addressing skills gaps for revenue agents that were conducted after we  identified mission critical skills gaps as a government-wide high-risk issue  in 2011. For objective 3, to assess the extent IRS’s Human Capital Office has the  capacity to hire employees in hard to fill positions, we reviewed  documentation related to IRS hiring requirements, including the Internal  Revenue Manual and policy explaining the Exception Hiring Process. We  interviewed division directors from each of IRS’s major business divisions  (W&I, LB&I, TE/GE, and SBSE) to understand their hiring experience and  impressions of time-to-hire and candidate quality results related to the  exception hiring process. We interviewed senior officials responsible for  IRS’s hiring function. We reviewed documentation related to systems  used to process and onboard new hires. We conducted this performance audit from August 2017 to March 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. Appendix II: Comments from the Internal  Revenue Service Appendix III: GAO Contact and Staff  Acknowledgments GAO Contact: Staff  Acknowledgments: In addition to the contact named above, Tom Gilbert (Assistant Director),  Shea Bader (Analyst-in-Charge), Crystal Bernard, Jacqueline Chapin,  James Andrew Howard, Meredith Moles, Steven Putansu, and Robert  Robinson made major contributions to this report. Devin Braun, Regina  Morrison, Erin Saunders-Rath, and Sarah Wilson provided key  assistance.
IRS faces a number of challenges that pose risks to meeting its mission if not managed effectively. Key to addressing IRS's challenges is its workforce. Cultivating a well-equipped, diverse, flexible, and engaged workforce requires strategic human capital management. GAO was asked to review IRS's enterprise-wide strategic workforce planning efforts. GAO assessed (1) how IRS defines its workforce needs and develops strategies for shaping its workforce; (2) the extent to which IRS identified the critical skills and competencies it will require to meet its goals, and its strategy to address skills gaps in its workforce; and (3) the extent to which IRS's Human Capital Office has the capacity to hire employees in hard to fill positions. GAO analyzed trends in staffing across IRS and in selected mission critical occupations; compared IRS strategic workforce management processes, practices, and activities with federal regulations and leading practices; analyzed IRS documents and interviewed agency officials. The Internal Revenue Service (IRS) has scaled back strategic workforce planning activities in recent years. IRS officials told GAO that resource constraints and fewer staff with strategic workforce planning skills due to attrition required IRS to largely abandon strategic workforce planning activities. However, a number of indicators, such as increasing rates of retirement eligible employees and declining employee satisfaction, led IRS to determine that continuing to make short-term, largely nonstrategic human capital decisions was unsustainable. One way IRS sought to address these issues was to develop a strategic workforce plan and associated workforce planning initiative. Initiative implementation, however, is behind schedule and on hold. IRS attributed the delay to a combination of: 1) personnel resources redirected to implement Public Law 115-97—commonly referred to as the Tax Cuts and Jobs Act, 2) lack of workforce planning skills within its Human Capital Office, and 3) delayed deployment at the Department of the Treasury (Treasury) related to a new workforce planning system. As a result, IRS lacks information about what mission critical skills it has on board, where skills gaps exist, and what skills will be needed in the future. IRS staffing has declined each year since 2011, and declines have been uneven across different mission areas. GAO found the reductions have been most significant among those who performed enforcement activities, where staffing declined by around 27 percent (fiscal years 2011 through 2017). IRS attributed staffing declines primarily to a policy decision to strictly limit hiring. Agency officials told GAO that declining staffing was a key contributor in decisions to scale back activities in a number of program and operational areas, particularly in enforcement, where the number of individual returns audited from fiscal years 2011 through 2017 declined by nearly 40 percent. IRS has skills gaps in mission critical occupations, and the agency's efforts to address these skills gaps do not target the occupations in greatest need, such as tax examiners and revenue officers. However, the results of an interagency working group effort that began in 2011, and was intended to address skill gaps among IRS revenue agents and other occupations with skills gaps across the government, may hold important lessons for addressing skills gaps in other mission critical occupations at IRS. IRS's Human Capital Office has limited staffing capacity to hire employees in hard to fill positions, which holds risks for the agency's ability to implement the Tax Cuts and Jobs Act. IRS is undertaking a variety of activities to improve its hiring capacity, but has not determined how each activity will be evaluated and will contribute to increased hiring capacity or associated outcomes. In addition, changes in the agency's hiring processes have been confusing to managers and contributed to hiring delays. Clear guidance on hiring request requirements would better position IRS to avoid the risk of hiring delays for mission critical occupations.