IRS ‘tax cheats’ target of bipartisan bill

Internal Revenue Service employees with a record of misconduct or tax delinquency would not receive bonuses under a bill aimed at agency “cheats.”

The No Bonuses for Tax Cheats Act, introduced Oct. 28, would withhold bonuses to employees “with respect to whom there is substantial evidence of misconduct … or seriously delinquent tax debt.”

“It’s time to stop giving bonuses to IRS employees who behave badly,” said Sen. Mike Enzi (R-Wyo.), one of five lawmakers sponsoring the bill. “Why should we reward IRS employees for late taxes or misconduct? This bill will provide a rational solution to ensure the IRS is more accountable to the American people.”

The legislation is also sponsored by Sens. Richard Burr (R-N.C.), Joe Manchin (D-W.Va.), John Thune (R-S.D.) and Pat Roberts (R-Kan.). Burr and Manchin introduced similar legislation in April 2014.

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Last year’s bill as well as this most recent legislation stem from an April 2014 report from the Treasury Inspector General for Tax Administration that found that between Oct. 1, 2010 and Dec. 31, 2012, more than 2,800 employees disciplined within the past year for misconduct collected a total of $2.8 million in monetary awards. That included more than $1 million in cash awards for 1,100 IRS employees who had failed to pay federal taxes.

The number of employees with conduct issues who were paid performance awards represented just 4 percent of the 67,870 IRS employees who received awards in fiscal 2012. The agency’s total workforce that year numbered about 98,000, according to the IG, and the average award for union employees was $944.

A similar report issued this year found that 108 of 364 employees with “willful tax noncompliance cases closed between Oct. 1, 2008 and Sept. 30, 2013 , received one or more awards, promotions, quality step increases or Voluntary Separation Incentive Payments (VSIP) within one year after being disciplined for the tax noncompliance.”

“The IRS has an awards and recognition program in place to reward and retain competent and talented employees, but, as previously reported with few exceptions the IRS did not consider tax compliance or other misconduct when issuing performance awards or most other types of awards for these cases,” the report stated. “Additionally, governmentwide policies do not provide guidance on providing awards to employees with conduct issues. As a result of the lack of consideration of conduct issues, these employees were provided the following awards and other payments after being disciplined for willful tax noncompliance:

  • Almost $145,000 in performance and special act awards.
  • Almost 900 hours in time-off awards.
  • More than 30 temporary and permanent promotions.”

IRS officials told auditors in 2014 that they generally did not consider conduct issues when paying employees’ performance awards partly because of their interpretation of the agency’s contract with the National Treasury Employees Union (NTEU).

In an email to Federal News Radio, NTEU National President Tony Reardon said the organization did “not oppose conduct being a consideration in the determination of performance awards and have agreed with the IRS that employees with serious violations will be ineligible.”

“NTEU believes that everyone should pay their taxes. IRS employees have a higher rate of tax compliance than virtually any other group; three times higher than Congress,” Reardon said. “However, we do not believe a blanket policy of prohibiting all awards without regard to the severity of the offense is warranted.”

The IRS did not immediately respond to a request for comment.

Burr said in a statement that this bill was a first step in preventing “bureaucrats from getting paid bonuses while fleecing the taxpayers at the same time.”

“It’s unconscionable that federal employees are eligible for bonuses, paid for by Americans, while they have dodged the tax collectors,” he said.”

Thune added in his statement that at its core, the bill was “about accountability.”

“This bill says to hardworking Americans that the federal bureaucrats who collect their taxes have the same responsibility they do in fulfilling tax obligations,” he said. “No one, especially employees at the IRS, should be rewarded while willfully cheating on their taxes or otherwise engaging in misconduct.”

A similar bill entitled “No Bonuses for Tax Delinquent IRS Employees Act of 2015” was introduced in April in the House.

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