The IRS is losing its chief technology officer, Terry Milholland, due to a lapse in a 1998 statute that allowed for a higher pay band for select positions at the tax agency, according to Commissioner John Koskinen.
In a June 29 email to staff, Koskinen said Milholland is the latest IT executive to leave since the Streamlined Critical Pay Authority — part of the IRS Restructuring and Reform Act of 1998 — expired in 2013 without a congressional vote to renew.
The RRA authorized the IRS to fill up to 40 critical positions at a higher pay band, with starting salaries ranging from $130,000 to $227,000. In comparison, salaries for members of the Senior Executive Service topped out at $179,000 in 2013, according to the Treasury Inspector General for Tax Administration.
A 2014 TIGTA report found that the 168 positions held under this authority since 1998 were “adequately justified; the need to recruit or retain exceptionally well-qualified individuals was demonstrated; and that pay limitations were adhered to.”
“This hiring authority served taxpayers well since Congress put it in place in 1998, helping us on a variety of critical projects,” Koskinen said in the note to staff. “Unfortunately, that special hiring authority expired in 2013 and has not been renewed, which seriously harms our ability to recruit the best IT and cybersecurity talent out there.”
Koskinen highlighted Milholland’s work on the Customer Account Data Engine (CADE2), which, under the second generation, enabled IRS systems to process and update taxpayer information daily, rather than weekly. The new system sped up a number of key processes and got the program off of the Government Accountability Office’s high-risk list, where it had been since 1995.
“Changes like these don’t come about without the expertise and know-how that Terry brought to the table,” Koskinen said.
Without the ability to pay higher salaries, the IRS won’t be able to attract or keep employees with that level of experience, he added.
FCW first reported Milholland’s departure on July 1.
A month earlier, Milholland warned this would happen while giving testimony before the House Committee on Oversight and Government Reform.
“The loss of streamlined critical pay authority has created major challenges to our ability to retain employees with the necessary high-caliber expertise in IT and other specialized areas,” he said during a May 25 hearing. “In fact, out of the many expert leaders and IT executives hired under streamlined critical pay authority, there are only nine IT experts remaining at the IRS and we anticipate there will be no staff left under this authority by this time next year.”
The authority enabled the IRS to hire these experts on four-year contracts, which began expiring on a rolling basis in 2013.
“Unfortunately, this means Terry will be leaving the IRS, even though he would have liked to have stayed longer,” Koskinen said. “I salute him and the team for their infinite patience and dedication in meeting the never-ending challenge of improving our IT systems.”
