IRS Rewards Employees Who Don’t Pay Their Taxes

IRS Rewards Employees Who Don't Pay Their Taxes

The IRS paid more than $1 million in cash bonuses to more than 1,100 agency employees who owed back taxes to the federal government, according to an audit conducted by the Treasury Department's Inspector General for Tax Administration (TIGTA). These tax avoiders also received more than 10,000 hours in additional time off as part of their performance bonuses.

Overall, the audit noted, the agency awarded more than $2.8 million in cash bonuses between Oct. 1, 2010, and Dec. 31, 2012, to more than 2,800 employees who had been recently subjected to disciplinary action for conduct issues.

With few exceptions, the IRS does not consider tax compliance or other misconduct when issuing performance awards or most other types of award, according to the audit. And government policies do not provide guidance on providing awards to employees with conduct issues.

This seems to run counter to the 1998 law that instituted reforms at the IRS that call for removal of IRS employees who intentionally engaged in misconduct, including "willful failure to pay federal taxes," the audit notes.

"Thus, while not specifically prohibited, providing awards to employees with conduct issues, especially those who fail 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 auditors conclude.

In response, the IRS's "human capital officer" agreed the IRS "should determine the feasibility of implementing a policy requiring management to consider conduct issues resulting in disciplinary actions, especially the nonpayment of taxes owed to the Federal Government, prior to awarding performance and discretionary awards."

It was further noted that, even without a formal policy in place, the IRS has not issued awards to any executives over the past four years who were subject to a disciplinary action. "If feasible, a policy for the entire IRS workforce will be considered," the agency said, but that "would be subject to negotiations with the National Treasury Employees Union." 

Perhaps Kent Hoover, the Philadelphia Business Journal's Washington Bureau Chief, said it best in an article on the subject: "So the IRS, the agency that can seize your house if you don't pay your taxes, has to negotiate with its union to stop paying bonuses to employees who don't pay their taxes." 

For those who are not familiar with the TIGTA, he is the individual who oversees the IRS's operations and has, over time, pointed out many of the areas in which the agency has fallen short in fulfilling its various missions. It's good to know that somebody's keeping track of this important function on behalf of those who do pay their taxes.