IRS, employee union strike deal on bonuses

The Internal Revenue Service has given the green light to tens of millions of dollars in employee bonuses, a decision that congressional Republicans immediately rebuked.

IRS employees will receive around $43 million in bonuses this spring under an agreement reached with the National Treasury Employees Union, which represents some agency employees.

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Union officials said that total was well short of the $75 million that the employees were owed under their labor agreement. But in the wake of last year’s targeting controversy, Sen. Orrin Hatch (R-Utah) quickly and sharply criticized the decision to give bonuses at all.

“It’s hard to think of a group of people less deserving of bonuses than IRS employees. Frankly, this is outrageous,” Hatch, the top Republican on the Finance Committee, said in a statement. 

“I understand that not every IRS worker was responsible, but this just is the wrong signal to send the American people who were rightly outraged by how this agency treated people for their political views.”

The decision on Monday by John Koskinen, the new IRS commissioner, to sign off on bonuses is a shift from previous agency leadership.

Danny Werfel, the interim chief installed by President Obama shortly after the agency apologized for singling out Tea Party groups, had moved to cut off bonuses last year.

In addition to the targeting controversy, the IRS, like other agencies, faced a tighter budget last year because of automatic sequestration cuts — a situation Werfel cited when he told employees he would seek to cut off bonuses.

But Koskinen, the new IRS commissioner, told employees the bonuses would be money well spent on staffers who had faced a trying period at the agency. In all, the IRS will hand out some $62.5 million in bonuses to employees, well below the $89.1 million awarded in fiscal 2012.

Koskinen, according to a statement released by the IRS, "has heard repeatedly from employees across the nation about the importance of the performance awards. The decision to cancel them last year was not a popular one, and significantly affected employee morale."

"You and your colleagues do impressive work on a wide range of efforts across the IRS, from taxpayer service and tax enforcement to IT and operations support," Koskinen told IRS employees in an agencywide message. "I firmly believe that this investment in our employees will directly benefit taxpayers and the tax system."

The new commissioner is likely to be questioned about that decision on Wednesday, when he appears before a House Ways and Means subcommittee for his first testimony after being sworn in.

Colleen Kelley, the NTEU president, said the union believed it would have won a court challenge if it sought the full amount of bonus money.

But in the end, Kelley said, the union thought it best to avoid “protracted litigation.”

“While it was difficult to accept this reduction in the total amount of the awards outlined in our contract, I felt that given the current financial pressures facing federal employees, it was better that they receive their payments rather than wait for a protracted period,” Kelley said in a statement.

— This post was last updated at 7:45 a.m. on Feb. 4.