IRS looks to reverse ‘bad decision-making’ with updated management practices

The agency says it is on track to implement new hiring policies, and doubled down on its tax ID fraud defenses.

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Internal Revenue Service officials say the agency is on track to update hiring policies and practices by the end of October, a move they hope will help plug HR cracks that bad actors are using to find their way back onto the tax agency’s payroll.

Jeffrey Tribiano, IRS deputy commissioner for operations support, told House oversight subcommittees on Wednesday that the agency was following recommendations from a July Treasury Inspector General for Tax Administration report on the process of rehiring former employees with a history of misconduct.

“We’re going to have [the updated process] implemented and running in October when we start our filing season and hiring back seasonal employees,” Tribiano said. “We took all the TIGTA recommendations that came through and we’re implementing them right now. We’ll have them done.”

TIGTA’s July report found that between January 2015 and March 2016, IRS rehired 213 people with significant prior misconduct issues. TIGTA issued a similar report three years earlier, which found 824 of roughly 7,100 former employees hired between January 2010 and September 2013 had “prior substantiated conduct or performance issues.”

Treasury Inspector General for Tax Administration J. Russell George said in his written testimony his office had “serious concerns” about IRS’ decision to rehire some of the 200 former employees, especially around those who weren’t fulfilling their own tax responsibilities.

“Although the IRS follows specific criteria to disqualify applicants for employment, past IRS employment history is not provided to the selecting official for consideration when making a tentative hiring decision,” George said in his testimony. “IRS officials stated that it would be cost prohibitive to review prior issues before a hiring decision and tentative offer has been made.”

George said during questioning that the only thing that could be said in defense of IRS’ actions is that a lot of the rehires are temporary employees who have experience working in the tax return process. But George also added it was “bad decision-making” on IRS’ part, whether it was 400 bad rehires or one bad rehire, and he said he hoped the new commissioner — current IRS Commissioner John Koskinen steps down in November — will be more proactive at avoiding this practice in the future.

Tribiano said while a person’s previous performance problems must be considered, the agency must follow the Office of Personnel Management’s rules on suitability.

“We go by OPM standards that state clearly if somebody has this disciplinary issue, concern, problem, after X number of years, OPM tells you whether or not they’re suitable, when you can take that consideration or can’t take the consideration,” Tribiano said. “What we’re changing in that process is two-fold. One is we do the suitability check, find that there’s an issue or concern or some type of problem with the employee. We now tag that when we send that to the hiring manager, so the hiring manager knows there’s a suitability issue with that individual. That’s what TIGTA’s recommendation was, because that allows us to still meet the requirements within OPM but notify the hiring manager that there’s an issue.”

Tribiano said IRS is also standing up a team to look at developing a process to remove IRS employees from the hiring process who have a history of misconduct or performance problems.

That hiring process, said Rep. Mark Sanford (R-S.C.), is what drives people crazy; it’s a circuitous process that doesn’t pass the common sense test.

“You have just defined this process as being outside the bounds of common sense,” Sandford said.

Tribiano pointed to the agency’s reduced funding as a reason for why, among other things, the IRS hiring process needs an update.

“Reduced resources affect every part of the IRS, not just our revenue agents and revenue officers,” Tribiano said. “It affects our contracting folks, it affects our HR folks.”

Updating IT

IRS funding was at the heart of Wednesday’s discussion. IRS is $900 million below where it was funded in 2010. The IRS commissioner in July said to maintain current performance levels — including a 79 percent level of phone service during the most recent tax filing season — the agency would need $220 million above fiscal 2017 numbers, or $11.235 billion.

Committee members split along party lines when it came to whether or not funding directly relates to IRS’ HR and IT performance. Republicans were adamant there wasn’t a connection, while Democrats said there was something to be said for seven years of underfunding.

Rep. Gerry Connolly (D-Va.) said the dramatic cuts over the past seven years have impacted IRS’ ability to fulfill its mission, and the American people are also feeling the pinch through the drop in customer service quality and reliability.

“I’m most alarmed with the IRS budget constraints impeding the ability of the agency to update its outdated IT systems, delaying more than $200 million in investments,” Connolly said. “IRS has legacy IT systems that date back to the Johnson administration.”

Rep. Mark Meadows (R-N.C.) said he was also concerned about the number of outstanding IT recommendations, and security should be the top priority for the agency.

“And yet what we have found over and over again, is we’ve got legacy systems, we’ve got out-of-date systems, and everything wants to come running back to the financial concerns,” Meadows said. “But I’ve looked at the appropriations, I’ve looked at numbers where they are, and there is not a linear correlation between the amount of money you get funded and addressing those problems.”

Equifax breach

Another security area committee members focused on was the recent news about the IRS’ contract with beleaguered credit reporting agency Equifax.

IRS Chief Information Officer Gina Garza confirmed no IRS data was compromised during the breach.

As for questions about a short-term bridge contract with Equifax to provide electronic authentication services while the agency waited for a decision on a bid protest, Garza said in her written testimony that because there was no indication of IRS data being jeopardized during the breach, the agency did not immediately pursue the action of choosing a new vendor.

“Such action is available to an agency if there are ‘urgent and compelling circumstances that significantly affect the interests of the United States,’ or if performance of the contract is in the best interests of the United States,” Garza said.

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