The IRS is still paying bonuses to nearly 2,000 bad employees, including more than two dozen who were actual tax-cheats themselves, the agency’s inspector general said in a new report this week.
The audit suggests the tax agency’s efforts to crack down on bonuses have not fully succeeded, according to the Treasury Inspector General for Tax Administration.
IRS screening did stop more than 1,000 employees with tax problems from getting bonuses, but 1,962 employees with discipline problems — and 26 who had been found to have intentionally cheated on their tax returns — were still paid bonuses in 2016 and 2017, topping $1.7 million.
Other employees who weren’t in full compliance but hadn’t been flagged for discipline also snuck through, the inspector general said.
The IRS promised to study the issue.
But top lawmakers on Capitol Hill said that wasn’t good enough.
“Given that this is the second time TIGTA has raised concerns about the IRS awards process for employees with conduct or tax compliance issues and that Treasury and Congress have both laid out clear expectations, we strongly believe that an assessment of resource needs and timeline to implement the recommendations will delay solving this very real and pressing problem,” said House Ways and Means Chairman Kevin Brady and Senate Finance Chairman Orrin G. Hatch.
The new report is a follow-up to a previous audit that found more than 2,800 employees with conduct problems had gotten bonuses from 2010 to 2012.
The IRS insisted it took the matter seriously.
“The IRS understands the importance of withholding awards from employees whose conduct is deemed to impact the integrity of the service, and/or who have a tax compliance issue, regardless of the level of discipline imposed,” wrote Katherine M. Coffman, a “human capital officer” at the agency, in the IRS’s official response.
She agreed with all three recommendations for fixing the problem, but said they won’t be done until next January.
Among those getting bonuses were two employees who illegally snooped on others’ tax returns.
Two other employees sexually assaulted colleagues, yet were paid nearly $1,500 in combined bonuses, the audit found.
The inspector general said the agency only screened for people who were disciplined enough to serve at least a one day suspension. Investigators said the agency didn’t screen people who had tax problems but weren’t suspended.
That included three employees who received a combined $7,000 in bonuses despite having $65,000 in outstanding tax balances deemed impossible to collect by the agency.
Paying those bonuses broke the law, the investigators said.
In a statement after the report, the IRS said the examples were “unacceptable” but said it’s taken steps to try to get a handle on things since the last audit.
“This continues to be a priority for us, and we will continue to make improvements going forward,” the agency said.
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