Watchdog: IRS issued bonuses to employees with conduct issues

The Internal Revenue Service (IRS) issued more than $1.7 million in awards in fiscal 2016 and early fiscal 2017 to employees who had been disciplined by the agency, a Treasury Department watchdog said.

“Some of these employees had serious misconduct, such as unauthorized access to tax return information, substance abuse and sexual misconduct,” the Treasury Inspector General for Tax Administration (TIGTA) said in a report made public this week.

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The IRS has a program to reward high-performing employees with cash bonuses, time off and other awards. 

In a 2014 report, TIGTA found that the IRS generally had not considered misconduct when issuing awards. Since that report, the IRS issued guidance expanding their screening for misconduct prior to issuing awards, and TIGTA decided to conduct a follow-up to its earlier review.

TIGTA found that the “vast majority” of IRS employees who received awards did not have any misconduct problems. However, in fiscal 2016 and early fiscal 2017, the IRS had given awards to nearly 2,000 employees who were disciplined in the 12 months prior to receiving the bonus.

The watchdog recommended that the IRS expand their misconduct screenings and examine the tax-compliance status of employees before giving awards. The IRS agreed with the recommendations and said it would examine its resource needs and timeline to implement them.

In a letter to the IRS, Senate Finance Committee Chairman Orrin Hatch (R-Utah) and House Ways and Means Committee Chairman Kevin Brady (R-Texas) expressed concerns that an assessment of resource needs and timeline would delay the IRS’s actions to fix its problems.

“The requirements to consider all employee misconduct and tax non-compliance when making awards are not optional and we strongly urge the IRS to implement TIGTA’s recommendations immediately,” the lawmakers wrote.

An IRS spokesperson said the agency is reviewing the letter from Hatch and Brady.

The IRS said in a statement that it “takes conduct issues very seriously, and we have taken important steps to conduct reviews and misconduct screenings before granting awards and high-level recognition.”

“Clearly, the conduct examples identified in this report involve unacceptable behavior, but it’s also important to note the IRS has strengthened the conduct review process for granting awards since 2014,” the agency said. “This continues to be a priority for us, and we will continue to make improvements going forward.”