When IRS workers don't pay taxes, some got bonuses, report says


When IRS workers don't pay taxes, some got bonuses, report says

A report from internal investigators found that while the Internal Revenue Service is supposed to terminate employees who “willfully violate tax law,” more than 60 percent of those investigated over a ten year period for their tax behavior were allowed to keep their jobs, with many also getting bonuses and other employee rewards.

“In addition to not being terminated for willful tax violations, some IRS employees also received promotions, performance awards, and permanent pay increases within one year after their willful tax noncompliance case was closed,” read a report from the IRS inspector general.

The tax compliance issues for IRS employees were fairly common:

  • understating tax liability
  •  claiming first time home buyer tax credit, but didn’t buy a house
  • wrongly claiming dependents to reduce income
  • claiming head of household (not entitled)
  • failure to report thousands of dollars in income

Over a ten year period from 2004-2013, the review found that 61 percent of the 1,580 IRS workers found to have “willful tax noncompliance” avoided termination, while 39 percent were fired, resigned or retired from their IRS jobs.

“Our review of a judgmental sample of 34 cases found that some employees, who management had concluded were not credible, with significant and sometimes repeated tax noncompliance issues, or a history of other conduct issues, were not terminated,” the report stated.

As for the employee rewards for some of those over 1500 workers – they included almost $145,000 in performance bonuses, almost 900 hours in time-off wards and more than 30 temporary and permanent promotions – all for people with major tax problems.

The study also raised questions about how the IRS Commissioner – who is the final arbiter of whether an IRS employee should be fired for noncompliance on taxes – had made the decisions on the fate of numerous tax agency workers.

“Although we currently document the mitigating factors specific to the employee and the decision whether to mitigate a termination to a lesser penalty, we agree that we can improve this process,” the IRS wrote in its response to the report.

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