(Diana Esters / Americans for Tax Reform) – DOGE is right to reduce the amount of IRS office space.

The need to reduce the IRS office footprint is well established. A June 5, 2024 Treasury Inspector General for Tax Administration (TIGTA) audit documented underused and unneeded IRS office space.

The full report can be found here.

Excerpts and figures below, from the Final Audit Report:

Excerpt 1:

“The Federal Government’s continuing struggle with excess and underused space has needlessly cost taxpayers millions of dollars.”

Excerpt 2:

“The Government Accountability Office Reported that the Federal Government could better manage its real estate portfolio by effectively disposing of unneeded buildings and collecting reliable real estate data. More recently, the Department of the Treasury issued bureau-specific guidance to the IRS on annual space planning and office utilization. After personnel, rent is one of the IRS’s largest operating expenses.”

Excerpt 3:

“Until the IRS develops and maintains an overall long-term space reduction plan fully addressing and maximizing space savings associated with current telework policy, it will continue to struggle to sufficiently address the significant amount of unneeded space that it currently occupies.”

Excerpt 4:

“According to the Internal Revenue Service (IRS), it will spend approximately $600 million on real estate costs in Fiscal Year (FY) 2024. This includes 516 office buildings totaling approximately 22.3 million square feet. After personnel, rent is one of the IRS’s largest operating expenses.”

Excerpt 5:

“Federal real estate management has remained on the Government Accountability Office’s (GAO) High Risk List since January 2003, due to the Federal Government’s continuing struggle with excess and underused space, which has needlessly cost taxpayers millions of dollars.”

Excerpt 6:

“In FY 2023, more than one-half of IRS buildings had a workstation occupancy rate of 50 percent or less. This is due in part to the increased use of telework and remote work, which requires less space per employee. Additionally, the IRS lacks a long-term space reduction plan that clearly specifies the space reductions it expects to achieve annually beyond FY 2026 and how it will sufficiently decrease its unneeded office space.”

Excerpt 7:

“The remaining 14,169 IRS employees (61 percent) in frequent telework status were assigned to an individual workstation. Moving these employees to a 2-to-1 workstation sharing/hoteling ration, for example, could potentially eliminate up to 7,084 unneeded workstations resulting in a potential space reduction of 396,704 RSF [Rental Square Feet]. At an average cost of $27.30 per RSF in FY 2023, this unneeded space is costing the IRS approximately $10.8 million per year. Typically, these individual workstation assignments occur because there is an excess of workstations available and, therefore, employees were not removed from individual desk assignments.”

Excerpt 8:

“Although the IRS has reduced its overall space footprint by approximately 2 million square feet since FY 2018, its overall individual workstation occupancy rate decreased during that period from 65 percent in FY 2018 to 60 percent in FY 2023. This decrease in the workstation occupancy rate occurred because the IRS’s need for workstations decreased at a faster pace than its elimination of unneeded workstations through space reduction projects. Figure 2 compares the IRS workstation occupancy rates for FYs 2018 through 2023.”

Excerpt 9:

“As of September 2023, over one-half (51 percent) of all IRS buildings had a workstation occupancy rate of 50 percent or less. Figure 3 shows the building workstation occupancy rates across the IRS.”

Excerpt 10:

“Across the IRS’s 13 territories, those with the lowest rates of workstation occupancy were in Washington, D.C; Atlanta, Georgia; and Andover, Massachusetts. Figure 4 shows the workstation occupancy rates across all buildings for each IRS territory as of September 2023.”

Excerpt 11:

“The IRS is also challenged in its future space planning by the need to ensure that it has sufficient space in the correct locations for additional staffing planned as part of the Inflation Reduction Act of 2022 implementation. During this review, we interviewed FMSS management to determine if the passage of the Inflation Reduction Act of 2022, which provided the IRS with significant funding for hiring, presented any challenges with workstation availability. FMSS management responded that the IRS currently has sufficient vacant space and capacity to meet most, if not all, of the projected hiring demand.”

Excerpt 12:

“We estimate that changing the method the IRS is currently using to allocate workstations to employees on frequent telework agreements to incorporate more effective workstation sharing/hoteling could reduce the need for as many as 7,084 workstations and potentially reduce office space rental costs by approximately $10.8 million per year…. Over a five-year period, we forecast this could potentially result in rental cost savings of $54,150,096.”