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IRS makes changes to bonus policy after 1,100 tax delinquent employees get them

IRS employees receive bonuses while not paying their own income taxes, which is discovered during an audit.
IRS employees receive bonuses while not paying their own income taxes, which is discovered during an audit.
Wikimedia Commons

The Internal Revenue Service issued a statement about how they are now going to change their bonus policy after it came to light that 1,100 of their employees received a bonus despite being tax delinquent, according to an April 23 report from the LA Times.

The controversial behavior came to light only after the Treasury Inspector General for Tax Administration conducted a review of the bonus program meant to recognize and reward IRS employees for their job performances.

Upon completion of the review, J. Russell George, the Treasury Inspector General, issued a TIGTA report, which states the following.

Providing awards to employees with conduct issues, especially those who fail to pay Federal taxes, appears to create a conflict with the IRS's charge of ensuring the integrity of the system of tax administration."

In his TIGTA report, George cites the impact on taxpayers in order for the IRS to pay their employees these bonuses for doing a good job, which amounts to $92 million in 2011 and $86 million in 2012. But in the past few years it has been the battle cry of the federal government that executives at large corporations and Wall Street powerhouses are being greedy to take bonuses for themselves when they are getting paid to do what they do. So it appears to be a contradictory position.

It also does not look good for a federal agency tasked with ensuring other citizens remain compliant in paying their income taxes would then turn around and pay bonuses to their employees who are failing to pay theirs as required.

The IRS says that they agree with the Treasury Inspector General's findings in his report, and that they had already begun to reduce the amount of bonuses handed out annually to employees due to the 2011 federal guidelines that called for federal agencies to reduce bonus spending. That's accurate, as they only handed out $86 million in bonuses in 2012 compared to the $92 million the year before. But that's not really much of a reduction from 2011 to 2012 if you think about it, only cutting back $8 million. And paying any bonus to an employee who owes the company that much or more seems like rewarding bad behavior rather than applauding a good work ethic.

The TIGTA report stated that "oversight and control over these awards is important to ensure proper stewardship" and that is probably the most important point at this stage, since moving forward correctly will require the right leader to hold the IRS bonus reins in the future.

And that is where the IRS believes they may run into a problem, stating that any new policy about bonuses for employees monitored under the watchful and protective eye of the National Treasury Employees Union (NTEU) will be a delicate dance between them and the Union leaders. To help stave that process off anytime soon, the IRS has agreed to work on a feasibility study about the issue of bonus pay, and to complete it by this summer.

Congress wants to force the Department of Treasury to use private tax collectors, according to the NTEU, who opposes that effort according to their Web site. And now after this recent TIGTA report from the Treasury Inspector General, Congress could decide to push for a complete look and overhaul to the troubled agency if public outcry is strong enough, as there has already been talk about the need to overhaul the current tax code. Do you think IRS employees should be entitled to receiving a bonus when they have not paid their own tax bills?