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April 16, 2018

Karen Kraushaar, Director of Communications
(202) 622-6500

More Effective Workstation And Office Utilization Could Result In Rental Cost Savings

WASHINGTON – More effective workspace sharing by the Internal Revenue Service (IRS) could reduce the need for more than 10,000 workspaces and reduce rental costs by approximately $80 million over five years, according to an audit report published today by the Treasury Inspector General for Tax Administration (TIGTA).

Specifically, changing the method by which the IRS develops and implements its space reduction projects, to incorporate more effective workstation and office sharing, could reduce the need for as many as 10,473 workspaces. Releasing these underutilized workspaces and the square footage of leased space associated with them could realize more than $80 million in rental cost savings over the next five years, TIGTA estimates.

TIGTA found that the IRS has not capitalized on underutilized workspace reduction cost savings that could be achieved from better utilization of employee "hoteling" (managers and employees sharing unassigned workspaces) such as reduced rental, workspace buildout, furnishing, and equipment costs. The IRS could not provide any documentation demonstrating measurable progress in releasing underutilized workspaces as a result of highly mobile employees and employees who participate in frequent or recurring telework.

According to the IRS, it will spend more than $600 million on real estate costs in Fiscal Year 2018. However, as of December 2017, the IRS's workstation (cubicle) utilization rate was only 66 percent. Since March 2012, TIGTA found that the IRS reduced its total office space by approximately two million square feet, which represents nearly an 8percent reduction. To accomplish this, the IRS either closed or consolidated 127 office spaces to release vacant space resulting from significant employee attrition, which outpaced space reduction efforts. Also, our review determined that 16 States had five or more significantly underutilized buildings with low occupancy (workstation occupancy rates of 50 percent or less).

TIGTA recommended that the Deputy Commissioners for Operations Support and Services and Enforcement revise the methodology for developing and implementing space requirements, set IRS-wide and specific business operating division and functional unit annual space reduction goals, and identify ways of incentivizing business operating division and functional unit executives to achieve these goals through significantly increased workspace sharing and hoteling. IRS management generally agreed with TIGTA's recommendations.

Read the report.