IRS staffers with tax debts eligible for bonuses

IRS staffers who owe back taxes will in some cases still be eligible for bonuses next year, the agency said this week.

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In a statement, the agency said it would keep employees who willfully skipped out on their taxes from getting performance awards, but would be more forgiving of those who made honest mistakes. John Koskinen, the IRS commissioner, announced a new round of bonuses this week for 2014, to be paid out early next year.

“It’s important to remember that not everyone at the IRS is a tax expert — some work in non-tax specific areas in occupations ranging from IT programmers, administrative professionals to human capital specialists,” the IRS told The Hill in a statement this week. “Where employees have been found to have made unintentional tax mistakes, they would generally still be eligible to receive performance awards they have earned.”

The announcement that staffers who owe back taxes could still collect bonuses angered top Republicans like Sen. Orrin HatchOrrin HatchGOP lawmakers call for overhaul of proposed corporate tax rules DEA decision against reclassifying marijuana ignores public opinion Trump op-ed counters Clinton’s pitch to Utah voters MORE (R-Utah), the incoming chairman of the Finance Committee. GOP lawmakers have already expressed deep opposition to IRS staffers getting bonuses in general, in the aftermath of the agency’s singling out of Tea Party groups. 

On top of that, lawmakers from both parties had been seeking to stop employees who were delinquent on their taxes from getting performance awards, after a Treasury Department inspector general report from this year said the IRS gave $1 million in bonuses to employees with tax compliance issues over a two-year span.

The IRS gave $2.8 million in all in bonuses to employees with conduct issues from October 2010 to December 2012.

In the spring, Koskinen said he would work with the National Treasury Employees Union to ensure that staffers with conduct issues didn’t get bonuses.

“My view is that employees understand they work for the IRS and are held to a higher standard,” Koskinen said in April. “People ought to be comfortable that if you work for the IRS and I’m chasing you for your taxes, I should pay mine.”

Under the agreement worked out between the NTEU and the IRS, employees who violated an agency code of conduct would not be eligible for bonuses.

Those violations include willfully evading taxes, threatening an audit for your own personal gain, assaulting a taxpayer and intentionally releasing taxpayer information — “serious misconduct,” as Koskinen told employees this week.

“This is a common-sense approach that underscores the seriousness of these provisions. Employees violating these basic standards should not be eligible for financial awards,” Koskinen added.

In its statement explaining the decision, the IRS said that the agency holds its employees to the highest possible standards on tax compliance, and that more than 99 percent of staffers are up-to-date on their taxes.

“IRS leadership determined that in cases of willful tax non-compliance, performance awards will not be paid to otherwise eligible employees,” the agency said.

“However, the law specifically excludes unintentional tax errors made due to a ‘reasonable cause,’ not to penalize employees for legitimate, unintended errors. The IRS monitors 100 percent of IRS employee tax accounts to identify acts of potential non-compliance and works with employees to ensure prompt payment.”

Colleen Kelley, NTEU’s president, said in her own statement that “IRS employees face discipline, including termination, for other tax compliance and conduct issues.” 

“Unlike the rest of the federal workforce, where penalties for conduct issues do not include withholding performance awards, this IRS-NTEU agreement links conduct to performance awards,” Kelley added.

But that’s not good enough for Hatch, who said this week that he was galled that an agency “rife with scandal, mismanagement and unaccountability” would not only give bonuses, but hand them out to staffers with tax debts.

“It’s no wonder the American people find it hard to believe the IRS needs more money when the agency fails to collect back taxes from their own employees and instead rewards them with bonuses,” Hatch said.