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Over 1,100 IRS employees received bonuses after not paying taxes

Published time: April 23, 2014 02:41
Reuters / Shannon Stapleton

Reuters / Shannon Stapleton

According to a new report by the Treasury Inspector General for Tax Administration, more than 2,800 IRS employees facing disciplinary actions received more than $2.8 million in monetary bonuses.

In addition to the millions in bonuses, those IRS employees also received 27,000 worth of additional time-off bonuses and more than 175 quality step increases (which allows employees to receive promotions faster, according to the Office of Personnel Management). The report, written by J. Russell George, looked at a period between October 1, 2010 and December 31, 2012.

Of those employees with disciplinary actions during the time period, more than 1,100 of them with “substantiated Federal tax compliance problems” received over $1 million in cash awards, $250,000 in time-off awards and 69 quality step increase awards within the same year the IRS proved the employees hadn’t paid their taxes.

The report found that the bonus program is legal under federal regulations, but is inconsistent with the agency’s mission of enforcing tax laws.

"These awards are designed to recognize and reward IRS employees for a job well done, and that is appropriate, because the IRS should encourage good performance," George said to the Associated Press."However, while not prohibited, providing awards to employees who have been disciplined for failing to pay federal taxes appears to create a conflict with the IRS's charge of ensuring the integrity of the system of tax administration."

The IRS has instituted a policy that would take conduct into account for bonuses to senior executives, according to USA Today. However, implementing the policy for all employees would require negotiations with the National Treasury Employees Union (NTEU).

"We take seriously our unique role as this nation's tax administrator, and we will strive to implement a policy that protects the integrity of the tax administration system and the reputation of the service," IRS chief Human Capital Officer David Krieg said in a written response to the audit.

The bonuses come after an agreement in February between the IRS and the NTEU to pay out about $43 million of the $75 million the employees were owed under their labor agreement, according to The Hill. The agency had tried to cancel all bonuses for 2012.

NTEU President Colleen Kelley told USA Today the union would review any proposed changes to its contract for the "relatively small number of employees who may have had some overlap between a performance award review period and a conduct issue."

Besides not paying taxes, the IRS employees received their bonuses with infractions like travel card misuse, misconduct, retaliation or fraud. According to the report, the IRS can withhold awards on a case-by-case basis under certain circumstances, like when an employee is facing pending criminal charges. The report also said that, in some cases, the bonuses were earned before the disciplinary action.

The IRS pointed out that none of the employees that the report focused on were senior executives. "Even without a formal policy in place over the past four years, the IRS has not issued awards to any executives that were subject to a disciplinary action," the IRS said in a statement.

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