If You Owe Back Taxes, Do You Get A Bonus? IRS Employees Do
April 24, 2014 by Ben Bullard
When an average American is delinquent in his Federal income tax payments, the Internal Revenue Service can make his life pretty unpleasant.
But when an IRS employee owes back taxes — and there are thousands who do — not only does he get consideration from his government employers that average Americans donâ€™t get; he also goes home with bonus pay.
According to the U.S. Treasury Inspector General for Tax Administration, the IRS paid out $2.8 million in bonuses to more than 2,800 employees â€świth recent substantiated conduct issues resulting in disciplinary action,â€ť including $1 million to â€śmore than 1,100 IRS employees with substantiated Federal tax compliance problems.â€ť
Those payouts, which also included paid time off and step increases in the governmentâ€™s merit job system, took place between October 2010 and the start of 2013. The final IG report was published internally on March 21, but was released to the public this week.
Although the IG report attempts to explain that enforcing tax law and dealing with IRS employees through the merit system are two endeavors segregated by government policies, it nonetheless remarks that rewarding IRS employees who are delinquent in their tax payments represents an apparent conflict of interest:
With few exceptions, the IRS does not consider tax compliance or other misconduct when issuing performance awards or most other types of awards. Governmentwide (sic) policies do not provide guidance on providing awards to employees with conduct issues. The IRS Restructuring and Reform Act of 1998 does not specifically mention awards, but does make mandatory the removal of IRS employees who are found to have intentionally committed certain acts of misconduct, including willful failure to pay Federal taxes. 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 IRSâ€™s charge of ensuring the integrity of the system of tax administration.
The report further recommends that the IRS consider â€śthe feasibility of implementing a policy requiring management to consider conduct issues resulting in disciplinary actions, especially the nonpayment of taxes, prior to awarding all types of performance and discretionary awards.â€ť
According to the summary, the IRS has agreed with that advice and is conducting a study with a June 30 deadline that might — might — lead to the development of such a policy.