Grassley questions IRS bonuses

The IRS is doling out $70 million in bonuses despite guidance from President Obama's budget office to hold back on all discretionary awards. 

The IRS says it is legally obligated to provide the bonuses under a collective bargaining agreement with employees, but the decision is drawing criticism from Sen. Chuck Grassley (R-Iowa), who argues government cut-backs under the sequester were supposed to stop such bonuses. 

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In a letter to acting IRS head Danny Werfel on Tuesday, Grassley argued the IRS is not legally required to provide the bonuses. 

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

The OMB guidance requiring bonuses to be withheld was written by Werfel himself, when he was still a controller at the budget office in April.

However, that guidance said agencies would still have to deliver the bonuses if they were legally required, something an IRS spokesman said is true in this case.

The spokesman said the agency is "under a legal obligation to comply with its collective bargaining agreement, which specifies the terms by which awards are paid to bargaining-unit employees." The spokesman added that the IRS is "actively engaged" with its union on the bonuses "in recognition of our current budgetary restraints."

According to Grassley, 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. 

The letter claims that the IRS plans to defer reclamation until it wraps up mid-term bargaining with the National Treasury Employees Union, even though Grassley says the IRS is not required to hold off on halting those bonuses until then.

Grassley maintained in his letter that the IRS bonuses do not qualify as mandatory. Rather, the IRS's agreement with the union allows for the IRS to reclaim such bonuses if there is a budgetary shortfall, the senator said.

Grassley's letter marks the latest in an increasing series of headaches for the IRS, which is continuing to weather the storm brought on by its improper targeting of Tea Party groups. Several high-ranking IRS employees have either stepped down or been placed on administrative leave, due to actions tied both to the targeting and to excessive spending at agency conferences.

Testifying before Congress, Werfel has vowed to take swift action to right the agency's course, and do what is necessary to restore public trust in it. The letter does not make clear whether the IRS plan to allow the bonuses was established before or after Werfel took over the IRS in May.

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