IRS' Field Office Restructuring in Pennsylvania

Pursuant to a congressional request, GAO provided information on the Internal Revenue Service's (IRS) most recent field office restructuring effort, especially as it relates to Pennsylvania, focusing on: (1) the basis of IRS' decision to consolidate the Philadelphia and Pittsburgh districts as part of an overall district office consolidation plan; (2) how this consolidation and other field office restructuring plans affect IRS positions in Pennsylvania; (3) the programmatic impacts in Pennsylvania as IRS transitions to its new structure, and their likelihood of continuation after the consolidation is complete; and (4) what savings, if any, IRS will achieve from its field office restructuring.

GAO noted that: (1) total staffing was a key criterion that IRS used to decide which district offices should retain a management structure and be designated as continuing districts; (2) generally, smaller districts merged into larger ones, as was the case in Pennsylvania, where Pittsburgh was merged into Philadelphia; (3) Pennsylvania is expected to lose 132 positions as a result of field office restructuring, the net of 187 positions to be eliminated and 55 positions to be added; (4) the largest portion of the reductions in Pittsburgh are to result from eliminating examination support positions; (5) slightly more than half of the reductions in Philadelphia are to result from closing the regional office; (6) rather than centralizing all compliance support functions in Philadelphia, IRS allowed the Pennsylvania district to centralize its collection support function in Pittsburgh and the examination support function in Philadelphia; (7) that decision appears to have mitigated the programmatic impacts of the district office consolidation on Pennsylvania, as some district officials felt that attrition was lower in Pittsburgh because of the decision to retain a collection support unit in Pittsburgh as a potential source of employment for examination support employees whose jobs were to be eliminated; (8) at the time of GAO's visit, the district was experiencing a few minor programmatic impacts as a result of the impending downsizing; (9) district officials and Pittsburgh managers expressed concerns regarding the potential for backlogs in collection support work, problems in servicing computer and telecommunications equipment, the challenge of administering programs across a large state, and ability to process bankruptcy cases; (10) IRS plans to redirect the $138 million in personnel costs it expects to save over a 5-year period to fund additional front-line customer service and compliance positions; (11) it is unclear whether the consolidation might involve some operational costs that may offset some of the benefits; and (12) without information on the operational costs of restructuring and a baseline ratio of front-line staff to support staff, it will be difficult to fully assess the net costs and benefits of IRS' field office restructuring.