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May 1, 2014
Taxwriters Request Unredacted Report on IRS Bonuses
by Meg Shreve

Full Text Published by Tax Analysts®

The Senate Finance Committee has requested unredacted copies of a recent Treasury Inspector General for Tax Administration report that found that some non-tax-compliant IRS employees received bonuses, a committee spokesperson told Tax Analysts April 30.

Finance Committee Chair Ron Wyden, D-Ore., plans to review the unredacted report and then decide how best to proceed, the spokesperson said. The House Ways and Means Committee will make a similar request, a committee spokesperson said.

Section 6103 prohibits the disclosure of confidential taxpayer information, but the Ways and Means and Finance committees may access that information upon request.

The recent TIGTA report found that more than 1,100 IRS employees between October 1, 2010, and December 31, 2012, received $1 million in cash bonuses and other work benefits within a year of the agency discovering they had tax compliance problems. More than 2,800 employees with conduct problems received bonuses and other work benefits, according to the report.

Other lawmakers have responded with measures designed to stop the payment of bonuses to tax-delinquent federal employees. On April 30 Ways and Means Committee member Sam Johnson, R-Texas, introduced the No Bonuses for Tax Delinquent IRS Employees Act of 2014, which would stop the IRS from giving bonuses to employees who owe back taxes.

On April 29 Sens. Claire McCaskill, D-Mo., and Kelly Ayotte, R-N.H., introduced the Stop Wasteful Federal Bonuses Act, which would force federal employees to forgo bonuses if they engage in behavior that could result in their suspension, termination, or more than one year's imprisonment. Those employees also would have to pay back any bonuses they had received in that year, according to a release on the bill.

Senate Finance Committee member John Cornyn, R-Texas, said he doubted the Finance Committee would hold a hearing or consider legislation dealing with the TIGTA report. Wyden "is under a lot of pressure by [Senate Majority Leader Harry Reid, D-Nev.], so I'm not optimistic," Cornyn told Tax Analysts.

The union representing IRS employees, meanwhile, dismissed suggestions that Congress should pursue legislation on the matter.

National Treasury Employees Union (NTEU) President Colleen M. Kelley said the IRS and the union are continuing to address the concerns raised in the TIGTA report. There are laws and regulations in place to deal with the issue and legislation is not necessary, Kelley said in a statement.

"IRS employees take very seriously their responsibility to pay their taxes," Kelley said. "IRS employees have a higher rate of tax compliance than any other federal agency, three times higher than Congress, and significantly higher than the general public."

Finance Committee member Benjamin L. Cardin, D-Md., also questioned the need for legislation. The NTEU and the IRS should first work through the collective bargaining process, he told reporters.

"I personally would give them a little time to try and work it out," Cardin said. "The concept of someone getting a bonus at the IRS who is not in compliance with the tax laws is difficult to understand."

Update, May 1: In a statement to Tax Analysts, Wyden said, "I have requested copies of the full report from the Treasury Inspector General and will be reviewing [it] thoroughly with my team. This is a very serious matter and I'm in agreement with the IRS Commissioner that it must be fixed. If IRS employees break the rules, they shouldn't be rewarded with bonuses. At the same time, the potential misconduct of a small group of IRS employees should not tarnish the overwhelming majority of hard working agency employees who do play by the rules."

Luca Gattoni-Celli contributed to this article.

Follow Meg Shreve (@Meg_Shreve) on Twitter for real-time updates.

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