- The Washington Times - Wednesday, November 26, 2014

IRS employees who made “unintentional” mistakes on their taxes are still eligible to get bonuses this fiscal year, the agency confirmed this week.

Commissioner John Koskinen announced the bonuses in an email to employees on Monday, saying they were a way to reward long-suffering staffers who have put up with budget and workforce cuts and are still keeping the agency humming.

But the payout, worth millions of dollars in taxpayers’ money, isn’t sitting well with congressional critics, who said it sends the wrong message at a time when the agency is reeling from several scandals, and when even staffers who are delinquent on their taxes can collect bonuses.

“It’s no wonder the American people find it hard to believe the IRS needs more money when the agency fails to collect back taxes from their own employees and instead rewards them with bonuses,” said Sen. Orrin G. Hatch, the Utah Republican who is poised to become chairman of the Senate Committee on Finance next year. “American families have been doing more with less for far too long now, and it is time the IRS [does] the same.”

IRS bonuses have been contentious ever since the May 2013 revelation that the agency improperly targeted conservative groups’ nonprofit status applications, including long delays and intrusive questions. Some groups are still awaiting approval nearly five years after they applied for nonprofit status.

But Mr. Koskinen said in an email to employees that the bonuses were an appropriate way for taxpayers to reward the agency that polices them.

“I believe that rewarding our high-performing employees is a vital investment for our nation’s tax system,” he said.

Mr. Koskinen, who took over at the agency’s helm to clean up after the tea party scandal erupted, said the agency has shed 13,000 staff positions since 2010 but has more duties than ever. One of those is administering Obamacare’s tax penalty, which will show up in many tax filings early next year.

“Performance awards are a good investment that pays off — and they reflect the hard work you and your colleagues do for the nation,” he said.

The bonuses, which were first reported this week by The Hill, a newspaper that covers Congress, amount to about 1 percent of their salary for most employees. Several years ago employees got bonuses of 1.75 percent, but Mr. Koskinen said belt-tightening has hit hard.

Mr. Koskinen said he would take additional steps by denying bonuses for employees deemed to have violated the federal law’s code of conduct for the IRS. That means workers who abuse taxpayers, falsify documents, engage in extortion, refuse to file their tax forms or are caught intentionally understating their taxes won’t get bonuses. The law calls for them to be fired.

However, hundreds of employees who are behind in their taxes but aren’t deemed to have intentionally defrauded the government could still get bonuses, the agency confirmed to The Washington Times.

“IRS leadership determined that in cases of willful tax non-compliance, performance awards will not be paid to otherwise eligible employees. However, the law specifically excludes unintentional tax errors made due to a ‘reasonable cause,’ not to penalize employees for legitimate, unintended errors,” the agency said in a statement. “The IRS monitors 100 percent of IRS employee tax accounts to identify acts of potential non-compliance and works with employees to ensure prompt payment.”

The agency said more than 99 percent of its employees file and pay their taxes on time.

“It’s important to remember that not everyone at the IRS is a tax expert — some work in non-tax-specific areas in occupations ranging from IT programmers, administrative professionals to human capital specialists. Where employees have been found to have made unintentional tax mistakes, they would still be eligible to receive performance awards they have earned,” the agency said.

The IRS’s inspector general reported in April that the agency paid out more than $1 million in bonuses earlier this decade to 1,146 employees who investigators said had “tax compliance problems.” Those employees were also awarded more than 10,000 hours of paid vacation, valued at $256,000.

Inspector General J. Russell George said the bonus payments are legal, but pointedly noted that the law calls for IRS employees found guilty of serious misconduct to be fired.

In his email to employees, Mr. Koskinen apologized for the bonuses’ timing, saying he’d wished they would have gone out by the end of this year. But he said bonuses they paid in April “complicated the situation.” He said the agreement reached with the National Treasury Employees Union, which represents many IRS workers, calls for the next round of bonuses to be paid at the end of 2015.

NTEU didn’t respond to a request for comment Wednesday on the bonuses.

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