IRS Bonuses Mind Boggling

IRS

The Internal Revenue Service (IRS) wants everyone to know their tax dollars are well spent. However, their recent mind boggling IRS employee bonuses have some questioning the tax agency’s use of taxpayer funds.

The tax agency awards employees with cash, time-off and step increases in their IRS employment. These bonuses are reportedly given for good performance. While this is a common annual practice in corporate America, what is questionable here is that poor IRS performers got awards, too.

A new government audit shows that over 2,800 IRS employees who had recently been disciplined for performance issues received performance bonuses. A total of more than $2.8 million, more than 27,000 time-off awards and 175 step increases were awarded from Oct. 1, 2010, through Dec. 31, 2012, to employees who had been written up, suspended or otherwise disciplined. Yes, the IRS gave performance bonuses to poor performers.

The misconduct cited in the audit report ranged from failing to pay their own taxes to misusing government travel cards, violating their standards of official conduct, drug use, threats of violence as well as fraud. According to the report by the Treasury Department’s Inspector General for Tax Administration, the employees who were disciplined had received written reprimands, suspensions and even removal from the job.

The government did note that the conduct issues might have occurred after an employee earned a bonus, which is a common Human Resources practice. Most employers do not award bonuses to employees who had performance issues during the year involved, but timing is everything. However, the IRS union contract reportedly includes wording that disciplinary investigations and actions generally will not prevent someone from receiving a performance bonus.

The audit notes that 1,100 IRS employees who got award have substantiated tax compliance issues. While IRS policies do not prohibit awarding bonuses to employees with conduct issues including failure to pay their own federal taxes, the agency does have rules governing their fiduciary responsibility.  Specifically, they reportedly require employees to support their role in “ensuring the integrity of the system of tax administration.”

For its 2012 fiscal year, the IRS awarded bonuses to approximately two-thirds of its 98,000 employees. The audit report identified about 1,200 employees who had tax issues of their own or had received official-conduct violations during the period. Those 1,200 employees received $1.1 million in monetary bonuses and 11,000 hours of time off as awards. The report noted that one employee who was suspended for 10 days during September 2011 received a $1,300 performance award the following August.

Responding on Tuesday to reactions on their mind-boggling bonus policy, the IRS defended itself. They noted that the auditors did not find the bonuses that were awarded violated any federal regulations. That seems disingenuous. Just because something is not proscribed does not make it the right thing to do.

While the mind-boggling report on bonuses has many scratching their heads, at least the IRS is getting the message that its policies need changing. The agency has indicated that it is now developing new policies to consider conduct issues before giving out performance awards.

Opinion by Dyanne Weiss

Sources:
Forbes
Wall Street Journal
TIME

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