COVINGTON, Ky. – On Wednesday afternoon, the Internal Revenue Service (IRS) announced it will be closing its flat top facility in Covington in 2019, resulting in the elimination of about 1,826 jobs.
A statement from the IRS said: “As part of the continuing efforts to use resources efficiently, the IRS is taking steps to further consolidate submission processing operations across the country as electronic filing continues to grow and fewer taxpayers file paper tax returns. These consolidation efforts began in 2003, leading to the consolidation of 10 sites into five locations that process paper tax returns.”
City Manager Larry Klein stated, “First and foremost, we sympathize with those employees and their families and friends who have worked hard for the IRS for so long. These folks are our neighbors, our friends. Also for the nearby businesses that rely on IRS employees for lunch and retail trade. We also can understand the efforts of our federal government to become more efficient. We will begin discussion at once with the IRS and General Services Administration (GSA) and our federal legislative delegation about the future of these jobs and this site. The City will work aggressively to see if these IRS jobs can be relocated to another location in Covington, and to continue bring in more employers like CTI and Huntington to start to fill any void. This announcement gives the City more than three years to fill any void. And fortunately, there has long been interest by private developers to redevelop this site and to allow expansion of the Northern Kentucky Convention Center which is currently landlocked by the IRS.”
While the City is still gathering information, the closure apparently does not affect those employees housed at the nine-story Gateway Center located in downtown Covington.
The IRS’s one-level building has long been targeted for redevelopment and is located on nearly 23 acres of property. City leaders had hoped the jobs would remain if the center’s operations were relocated, news of this announcement now allows for prime riverfront real estate opportunities in Covington.
As to the closure of the facility, Klein said, “With every challenge there is an opportunity. One door closes and another opens. This announcement could open up 23 acres of prime riverfront property to ’Banks-type’ residential and office development similar to Cincinnati, and that can be integrated into Covington’s Riverfront Commons development plan.
According to the payroll tax returns filed by the IRS with the Covington Finance Department, the average annual wage of IRS employees at the Covington location is approximately $35,000 a year, although the exact breakdown of the IRS jobs between the flat top facility and the Gateway Center is not known. The potential loss of $1.5 million of annual payroll tax revenue would have to be offset by new jobs and property tax on the 23 acre riverfront site.
Mayor Sherry Carran stated, “While the immediate sense is one of shock, it is a change we knew was coming because the flat top facility was not efficient for the IRS which is why we have been working with the IRS and GSA in the past several years.”