AAS: IRS reverses course, says it won't close Austin processing facility

The Internal Revenue Service has reversed course and no longer plans to close its Austin facility.

The IRS said it will now keep the center, which is south of downtown Austin, open in order to "ensure there is sufficient capacity to best serve the nation’s taxpayers and process returns and taxpayer correspondence in a timely manner."

The Austin facility had 2,400 employees in 2016, at the time of the closure announcement, according to the labor union representing many of those workers. The IRS did not immediately respond to an American-Statesman inquiry about how many employees it currently has in Austin.

IRS leaders previsouly said they planned to close the Austin facility, which processes paper tax returns, to cut costs at the agency and redirect resources to online tax-filing services.

Nearly 90% of tax filers submit their returns online, a number the agency is trying to boost. But that still leaves tens of millions of paper returns for the IRS to process at centers like the one in Austin. The agency says it currently has a backlog of 24 million tax returns, with some refunds held up for 10 months or more.

Six year ago, the IRS announced a site consolidation plan for paper processing workforces. It closed a site in Cincinnati, Ohio in 2019 and in Fresno, Calif. in 2021.

The Austin site was scheduled to be consolidated with other sites in 2024, leaving two remaining locations in Kansas City, Missouri and Ogden, Utah.

Critics of the IRS’s plans to wind down the Austin facility — including the agency’s inspector general, the National Taxpayer Advocate Service and congressional Democrats — said that closing the agency’s operations could create financial hardship for millions of families, as many rely on tax refunds for basic living expenses.

The decision to keep the Austin operations center open "was made following a periodic review, and it aligns with the more recent revalidation analysis and feedback received in a recent Treasury Inspector General Tax Administration audit," the IRS said this week.

U.S. Rep. Lloyd Doggett, D-Austin, hailed the decision to keep the Austin site up and running. 

Given the extensive paper backlog and hiring challenges that have plagued the agency for the last two filing seasons, the Austin closure was not in the interest of either taxpayers or workers, Doggett said.

"Great day for Austin workers and for Austin taxpayers — as well as taxpayers nationwide,” Doggett said in a written statement. “Keeping our IRS Center running means more tax returns will be processed in a timely manner with quicker rebates and Child Tax Credit payments."

In addition, Doggett said Austin workers will maintain jobs while the agency retains the ability to recruit more Central Texas talent.

The Austin submission processing center at 3651 S. Interstate 35 is 456,000 square feet, according to the Travis Central Appraisal District, which appraises the site's value at $72.2 million.

This report includes material from American-Statesman wire services.