IRS hands out $70M in employee bonuses


The Internal Revenue Service is getting ready to dole out $70 million in bonuses, despite guidance from President Obama’s budget office to hold back on all discretionary awards. 

The tax agency, still embattled over its targeting of conservative groups, says that it’s legally obligated to provide the bonuses under a collective bargaining agreement with employees.

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But senior Republicans like Sen. Chuck Grassley (R-Iowa) are slamming the agency over the move, arguing that government cutbacks caused by sequestration were supposed to halt those sorts of bonuses and that the IRS frequently complains about not having enough resources.

“While the IRS may claim that these bonuses are legally required under the original bargaining unit agreement, that claim would allegedly be inaccurate,” Grassley, a top Republican on the tax-writing Senate Finance Committee, wrote in a letter to the current acting chief of the IRS, Danny Werfel. 

Sen. Orrin Hatch (Utah), the top Republican on the Finance panel, compared the bonuses to “robbing Peter to pay Paul,” and said they look “like a payoff to union workers at a time when we’re drowning in a sea of red ink.”

Grassley’s disclosure of the bonuses opens up a new avenue of criticism against the IRS, and came as hundreds of Tea Party activists descended on the Capitol for a rally that at times pressed for the agency’s abolishment. Republican lawmakers said Wednesday they were interested in introducing legislation targeting the $70 million in bonuses.

The IRS controversy has devolved in recent days into a back-and-forth between House Oversight Committee Chairman Darrell Issa (R-Calif.) and the panel’s ranking member, Rep. Elijah Cummings (D-Md.), about whether to release full transcripts of interviews with IRS officials involved in the singling out of Tea Party groups seeking tax-exempt status. 



But the Tea Party rally — attended by Glenn Beck and more than a dozen GOP lawmakers, including House Ways and Means Committee Chairman Dave Camp (R-Mich.) — is a sure sign that the grassroots anger at the IRS hasn’t subsided, and that Republican elected officials still see the issue as politically potent.


In his letter to Werfel, Grassley asked why the tax agency is planning on going forward with the bonuses even though the Office of Management and Budget (OMB) has directed government agencies to hold off on discretionary awards while under the sequester. 

The Iowa Republican also said it was his understanding that the IRS told the agency’s employee union in March that it planned to reclaim $75 million in funds that had been set aside for bonuses, per the OMB guidance. 

Werfel himself, then still controller at OMB, wrote the guidance requiring bonuses to be withheld, though that directive also said agencies would still have to cough up the bonuses if they were legally required.

A spokesman for the IRS, Dean Patterson, said that was the case for his agency, which he said was “under a legal obligation to comply with its collective bargaining agreement, which specifies the terms by which awards are paid to bargaining-unit employees.”

Patterson added in a statement that the IRS is “actively engaged” with its union on the bonuses “in recognition of our current budgetary restraints.”

The agency has already held two furlough days it says are being forced by the across-the-board spending cuts, with three more planned over the summer.

Werfel is expected to release a top-to-bottom review of IRS operations — as requested by Treasury Secretary Jack Lew — next week, and is expected to discuss his findings at a Ways and Means hearing next Thursday.

Colleen Kelley, the president of the National Treasury Employees Union, said in a statement that the union and the IRS had negotiated an awards program decades ago, and that they believed the IRS was legally bound to pay up. 

“NTEU is currently in discussions with the IRS on this matter and other matters resulting from budget cutbacks,” Kelley said.

Senior Democratic tax-writers, meanwhile, said they were still gathering facts about the bonuses, though Senate Finance Committee Chairman Max Baucus (D-Mont.) did call them “concerning.”

But Baucus added that it was his understanding that the bonuses were required under the union contract. “Some are probably deserved and some not,” Baucus said. “It’s just separating the wheat from the chaff, basically.”

Rep. Sandy Levin (Mich.), the top Democrat at House Ways and Means, said he too was still collecting information on the bonuses. But Levin also said that the Wednesday Tea Party rally and the spat over the transcripts showed that the inquiry into the IRS was getting too politicized.

“When you over-politicize things, you lose credibility. You undermine the credibility of this institution,” Levin told reporters on Wednesday. “And you make it more difficult, I think, to take the steps that need to be taken to rectify the mismanagement.”

At the rally, Camp and other speakers made clear that the congressional investigation into the IRS was still in its early stages, with the Ways and Means chairman vowing “we will get the facts, and we will follow them wherever they lead.”

Republicans and Democrats have been sparring over how much Washington officials were involved in the targeting of conservative groups, though few new details emerged on that front on Wednesday.

Lawmakers and activists at Wednesday’s rally cast the agency’s actions as part of a larger issue of government run amok, and made clear that their objections to the IRS went far beyond the targeting.

Several speakers, including Sens. Ted Cruz (R-Texas) and Rand Paul (R-Ky.), said the IRS’s role in implementing the Democratic healthcare law should be rolled back. GOP lawmakers at the event also pounded the immigration bill currently being debated in the Senate, as well as National Security Agency phone and Internet data collection programs.

“When we are told that it is OK for the IRS, EPA, ATF, FBI or anyone to hassle, threaten or intimidate others because of their skin color, religion or political belief, we stop being the country all of us want to build,” Beck said.